By Meghan Hall
Over the course of the last market cycle, underwriting practices have become much more stringent, as lenders have learned from the practices that resulted in the 2007-2008 Great Recession. As a result, it can be difficult for many Americans to qualify for new mortgages when searching for a new home, particularly if their current mortgage has not been paid off. The Registry recently spoke with EasyKnock’s Chief Executive Officer Jared Kessler, who helped to create the platform in an effort to better allow homeowners to tap into their equity when they need it most.
Jared, please tell The Registry a little bit about EasyKnock, the first institutionalized residential sale-leaseback company in the United States. What main points were you seeing in the residential real estate industry that prompted you to create EasyKnock?
U.S homeowners are sitting on over $7 trillion of untapped equity. Many of these homeowners are not able to access this equity given the difficulties of receiving loans through traditional financing channels. EasyKnock wants to help these people tap into their equity in order to have enough cash to live life the way they want to. Homes tend to be people’s biggest assets, but they aren’t able to access their value. We buy homes with cash and lease them back to owners at a fixed rate.
By extension, can you talk a little bit about MoveAbility; how does the platform build upon the services EasyKnock already offers to homeowners?
MoveAbility allows our customers to tap into their home equity before it even hits the market. Essentially, this product allows homeowners to sell their property and remain as renters while they search for a new home. The driving force behind this product is the ability of customers to gain enough money to help fund the purchase of the new house they wish to buy. It’s very difficult to obtain a new mortgage until you have paid off your current mortgage. MoveAbility allows the homeowner to pay off their current mortgage without having to sell their property for a lower price.
Can you elaborate on how the technology that drives EasyKnock and MoveAbility works? How does it allow homeowners to access the necessary funding to secure a new home when they already have an existing mortgage?
Our technology allows us to predict the outcome associated with each of our customers. The models we create produce a fair purchase price and market rent for each of our customers. This information is shared with our customers, making the process of home selling and home buying more transparent. The technology associated with MoveAbility and our Sell and Stay product creates autonomy of the process.
What is it about current underwriting rules that make this process even more difficult?
Traditional lenders are very strict about their current underwriting rules, leading to almost 25 percent of American homeowners not being able to qualify for a loan. Credit reports, pay stubs, tax returns and home appraisal are just a few of the items that mortgage underwriters have on their qualification checklist. Many Americans are in bad standing with at least one of these items, which makes it that much more difficult to receive a loan.
Where is EasyKnock/MoveAbility currently operating? Are there any markets where EasyKnock has been particularly popular? Why?
We currently operate in 34 states and Washington D.C. We plan to expand our outreach to the entire country in the near future.
Does EasyKnock typically pay market-rate for the properties it purchases?
We typically pay 70% of the home’s appraised value. Overall, our rent is also based on market rent.
How is EasyKnock different from traditional equity release programs? How do you think technology will continue to make it easier for homeowners to access equity?
Traditional lenders have a very clear-cut and rigid process, and many people simply don’t qualify for the programs they offer. We offer useful solutions to help these people access the equity they’ve already built. The introduction of technology into this space is making the numbers involved with accessing equity very transparent to homeowners. As proptech companies continue implementing these models into their home equity solutions, the process for homeowners tapping into their equity will become much easier and clearer.
EasyKnock recently announced that it has raised $215 M in Series A as it released MoveAbility. How does EasyKnock plan on using the funds?
We plan on using these funds to expand our market reach, increase our number of hires, and launch MoveAbility.
Who are some of EasyKnock’s most important investors?
Blumberg Capital, FJ Labs, Montage Ventures, Correlation Ventures, Rubicon Ventures, and 500 Startups are just a handful of EasyKnock’s influential investors.