Loan Factory launches fully automated originations through Pylon

Loan Factory announced Thursday that it is launching fully automated mortgage originations through a partnership with Pylon, a move the companies say will streamline operations, lower costs and speed up closings.

The company said the partnership will allow it to originate loans directly on Pylon’s infrastructure, eliminating manual loan operations and reducing reliance on wholesale lenders.

The company originates more than $5 billion in mortgages annually through a network of 2,500 loan officers across 48 states. Loan Factory said it expects the partnership to increase loan officer production sixfold across its core origination channels.

“Partnering with Pylon enables us to cut out the middlemen and deliver rates that our competitors can’t match,” Loan Factory CEO Thuan Nguyen said in a statement. “It also allows us to deliver instant approvals and faster closings, all while lowering costs.”

In an interview with HousingWire ahead of the announcement, Pylon CEO Trent Hedge said that the partnership originated after several Loan Factory loan officers expressed interest in having access to the platform.

Nguyen said that the need for something new stemmed from frustration with “traditional lenders”, who Nguyen says are “very low tech.”

“They don’t even have an API or technology for us to work with,” he added.

Pylon, a mortgage technology company backed by investors including Peter Thiel, as well as venture firms Conversion Capital, QED, Citi and Fifth Wall, automates much of the loan origination process through a vertically integrated platform connected directly to capital markets. Hedge said Pylon’s “mortgage rails” automate functions including processing, underwriting, closing and loan delivery through API-based infrastructure, reducing reliance on wholesale and correspondent lenders.

“We flow those mortgages directly through to the true source of capital, rather than wholesale lenders and aggregators who mark those rates up… the result is a much lower cost of capital and a much lower cost to originate,” Hedge explained.

Pylon earns revenue through per-loan fees and software subscriptions, and currently focuses on conventional and jumbo loans up to $5 million. The company’s platform gives lenders access to rates that are 75 to 200 basis points lower than traditional channels while reducing origination costs.

Hedge said the company is planning to expand into FHA, VA and non-QM products.

Loan Factory said the integration will allow it to build a mortgage origination process centered on automation and artificial intelligence. The company already operates its own proprietary mortgage platform, called Tera, but said that legacy wholesale-lender technology has limited its ability to automate operations fully.

“Loan Factory is building an entirely new version of their platform around Pylon’s capabilities, and we think they’re going to get a lot more value because they’re building software products specifically for their loan officers and taking advantage of more of the automation,” Hedge said.

Nguyen is confident in what Pylon will do for the company’s price offerings. The company recently upped its Best Price Guarantee program from $1,000 to $2,000.

“With this program, we challenge the consumer to shop around, and if they can find any lender, any loan officer that has a better rate than us, we will pay the consumer $2,000,” he said, adding that Loan Factory has never had to pay out a customer.