Better, a startup mortgage lender, is going public by merging with a special purpose acquisition company (SPAC), the startup announced in a press release Tuesday (May 11).
Better will merge with Aurora Acquisition Corp., which is sponsored by Novator Capital. The company will be valued at $7.7 billion post-money.
SoftBank Group recently invested $500 million in Better and is adding another $1.3 billion via a PIPE, or a private investment in public equity, which has been common with SPAC mergers. Better might end up placing $400 million of that amount with other investors, the The Wall Street Journal (WSJ) reported ahead of the announcement. The other $200 million of the $1.5 billion PIPE will be subscribed by Novator.
Better was founded in New York in 2014 and works to provide home loans for consumers through its website and banks like Ally Financial. In 2020, Better had over $850 million in revenue and over $200 million in net profits, WSJ reported.
“Everyone deserves a home, and we’re not going to stop until we make it possible for everyone to not just dream of a home, but to have one,” said Founder and CEO Vishal Garg in the press release.
Better’s trajectory was similar to other mortgage lenders in that it rode a wave of homebuying and refinancing activity as interest rates reached historic lows during the pandemic. Better extended over $24.2 billion in loans in 2020, a 490 percent growth year-over-year from 2019.
In separate news, the Consumer Finance Protection Bureau (CFPB) has been looking into mortgage servicers, PYMNTS reported. The CFPB has an interest in whether they’ve been following the rules of pandemic-era programs intended to keep struggling homeowners out of foreclosure. There have been accusations that homeowners were unable to get the aid they needed or were faced with discrimination.
“We are very concerned and we’re watching closely,” a CFPB official said at the time. “Our supervision team is robustly asking for more data than ever from servicers.”
The end result might be stricter penalties for mortgage servicers that have violated rules or hurt borrowers.
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