Home Equity Lending News

Figure Withdraws Bank Application Amid Layoffs

Figure Technologies Inc., the engine behind home-equity lending at many lending institutions, has withdrawn its application to form a new bank less than three years after it was submitted. The move comes amid layoffs and ahead of an expected initial public offering for the fintech.

According to the Office of the  Comptroller of the Currency, a new bank charter application for Figure Bank, N.A., was first received in November 2020. The proposed financial institution would be based in Reno, Nevada, and carry no deposit insurance.

A coalition of 10 organizations — including the American Bankers Association, the Independent Community Bankers of America and the National Association of Federal Insured Credit Unions — immediately asked the OCC for more comment time to evaluate the “novel charter applications.”

A lawsuit challenging the OCC’s authority to charter an uninsured deposit-taking national bank was filed by the Conference of State Bank Supervisors. But Figure amended the charter application in December 2021 to offer deposit accounts insured by the Federal Deposit Insurance Corp., making the legal challenge moot. The CSBS dropped its lawsuit in January 2022.

But on July 31 of this year, the San Francisco-based company withdrew the charter application for the proposed bank. No reason was provided for the withdrawal.

However, given the flurry of bank failures this year, Figure can also attempt to get on the FDIC’s prospective investor list for failed institutions and pick up a depository at a discount. That would potentially give it an existing deposit base and a banking infrastructure.

The withdrawal of the bank charter application comes as Bloomberg reported that 90 Figure employees were laid off last week, or around 20 percent of its staff — putting total pre-layoff headcount around 450 people. Bloomberg also noted that the company is preparing for an IPO of its lending business next year.

A Figure spokeswoman declined to comment on the layoffs. No WARN filings on behalf of Figure have yet been made public in either California, where the parent company is based, or North Carolina, where subsidiary Figure Lending LLC is based.

Figure reported last month that it had originated more than 85,000 home-equity lines of credit for over $6 billion since getting into the HELOC business. It ranked as the sixth-largest HELOC originator — and the highest-ranking non-bank HELOC lender — in the country during 2022.

This year, Figure launched a wholesale lending platform, and its home-equity originations were part of two securitizations. In addition, four lenders — CMG Financial, CrossCountry Mortgage, Fairway Independent Mortgage and The Loan Store — signed up as private-label partners.

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