Home Equity Lending News

New Lender Targets Non-Traditional Income Earners



A new entrant to the mortgage market aims to make the home lending process much easier for non-traditional income earners who are either obtaining a first mortgage or a junior-lien home-secured credit line.

Todd Orlando, CEO of Defy Mortgage, during interview

Defy Mortgage, which formally launched on Jan. 10, was co-founded in July 2022 by Chief Executive Officer Todd Orlando and Chairman Stephen Light, who are the only owners.

The initial concept was to create a mortgage company that makes it easier for cryptocurrency investors to get a mortgage, according to an interview with Orlando. But that expanded to a strategy to help a wide range of alternative-income consumers including gig workers, crypto investors and those who are not W-2 and a little bit untraditional.

The Nashville, Tennessee-based company operates as a traditional mortgage banker and has connected with non-QM investors whose requirements overlap with the alternative-income strategy. New business is generated from inbound leads from marketing, social media and established referral sources.

Transactions are processed through the LendingPad loan origination system, and Salesforce is the customer relationship management platform.

Among the initial offerings are home-equity lines of credit in first and second position, though today’s market dynamics favor junior liens.  He noted that second mortgage activity has moved from predominantly traditional purchase-money lending to home-equity transactions.

“I think the HELOC can be a really valuable product,” Orlando said.

The time to underwrite HELOCs is much faster thanks to valuation and title alternatives that are utilized instead of traditional full appraisals and title insurance policies. Plus, the loan analysis relies significantly on property value and bank-statement liquidity.

Orlando’s goal is to figure out how to make the process much easier for HELOCs and other mortgage products. You can instantly qualify for a car and close on the purchase within an hour. But there is a disconnect in the mortgage space.

“You should know within a fraction of the time whether ‘Sam’ is a reasonable borrowing risk or not and whether the combined loan to value is feasible,” he explained. “And that should be it.”

Defy Mortgage has internally built proprietary systems to achieve this goal, Orlando said.

Orlando sees HELOC originations accounting for around $20 million of the at least $100 million he estimates that Defy will originate in total mortgages during 2023.

When it comes to technology, Orlando is most optimistic about opportunities in title with blockchain technology. He says that while the outer edges of the mortgage process are visibly impacted by technology, “still, the middle piece is a little bit antiquated.”

The CEO, who worked Wachovia when it was acquired by Wells Fargo during the financial crisis, acknowledged difficulty in the capital markets this past year which he noted was the result of uncertain and fearful secondary investors responding to bond prices and spreads “moving all over the place.” He expects the capital markets to stabilize this year, though rates won’t necessarily come down.