The new IBM Hyper Protect Accelerator accepted applications from startups hailing from 42 countries all over the world. Only one Triangle startup was chosen to participate in it.
Durham-based Home Lending Pal, an online mortgage adviser, will be joining the accelerator’s Class of 2020, as part of 15 startups from nine countries ranging from Germany to Pakistan in the fintech, healthtech and insurtech fields. Home Lending Pal uses artificial intelligence to guide potential homeowners through the borrowing process, by first showing users what they can afford and then helping them find a lender.
Bryan Young and Steven Better, the CEO and COO of Home Lending Pal, respectively, started Home Lending Pal in 2017. Young said he was inspired to start Home Lending Pal when he observed friends and family who were sold homes they couldn’t afford. There are multiple factors that go into this, he said, from back-end deals to borrowers’ embarrassment that they cannot afford a mortgage.
“My mother bought her dream house at 19 just for it to be foreclosed a couple years later,” he said. “It was bait and switch stuff, where you get put into a low monthly mortgage that skyrockets in the second or third year.”
After spending the first year-and-a-half forming focus groups of potential users, they feel they know exactly what potential homeowners need.
Home Lending Pal users will first make a profile, where they can connect to their financial institution, so the startup’s technology can pull in a customer’s recent transaction history. This information helps Home Lending Pal give customers a soft quote of their FICO score. Then, they fill out a questionnaire listing their home preferences and personal history. This information runs through a machine-learning algorithm that immediately tells customers the best home loan for them.
Once users decide on a plan, they are matched with a lender. Since Home Lending Pal is free to borrowers, it makes its money by establishing this relationship. But unlike other home-loaning platforms, Young said, Home Lending Pal doesn’t connect users with a lender until the borrower decides they are ready to do so, so they are not pressured to enter into a mortgage unless they are certain of it.
“Our process of building the company has been: borrower first, lender second and Home Lending Pal third,” Young said.
Home Lending Pal’s relationship with IBM will help it overcome its remaining hurdles, Young said. An integral part of the company’s product is handling sensitive financial information, and it will need the correct security systems in place to do this. Home Lending Pal already has a relationship with Equifax, a credit-monitoring service, but Young said he hopes having access to IBM’s servers and security protocols—thus the “Protect” part of the “Protect Accelerator”—will help accelerate the auditing and approval process.
In addition to access to IBM’s security and encryption solutions, the accelerator will provide Home Lending Pal with ongoing technical and business mentorship, plus up to $120K in IBM Cloud credits.
Currently, Home Lending Pal is still in a private beta as it goes through internal testing by Equifax, but Young said the company could be fully functional and available to the public by the end of December, potentially just weeks after participating in the IBM Hyper Protect Accelerator in-person workshop in Charlotte. The workshop will run for four days starting Nov. 18. It will give Home Lending Pal the opportunity to work with entrepreneurs from across the world.
“When Steven and I started this two-and-a-half years ago, it was more of a dream—to disrupt the industry,” Young said. “So to have a company like IBM look at worldwide companies and select us as one of the few is incredible validation.”
Most importantly, the accelerator will help kick-start what COO Better said is a “vital” product.
“If we don’t understand the choices that we’re making and have a full grasp as to what this means to us down the line,” Better said, “we could be making choices that may not affect us today, but may be a significant burden for us later. At Home Lending Pal what we’re trying to do is address that question, before there’s a commitment… It is a tool that is vital to the financial health of every one of us.”