Getting a mortgage is a time-consuming process that involves shopping for a loan; choosing from various rates and terms; filling out an application; submitting pay stubs, tax returns and financial statements; waiting for approval; and, finally, closing the loan.
Mortgage lending has proven to be a tough industry for new companies to make waves in, and the sudden shutdown last week of San Francisco mortgage startup Sindeo helps show why.
Sindeo was one of more than two dozen startups seeking to streamline the cumbersome mortgage application, origination and closing process. Despite having what many described as top-flight technology and executives, it took down its website Tuesday night and replaced it with a brief note saying it had “made the difficult decision to wind down Sindeo.”
It didn’t say why, but a note from CEO Nick Stamos to investors obtained by Housing Wire said an investor who had committed to fund it tacked on a last-minute requirement to close the deal that it couldn’t meet. “My subsequent efforts to secure emergency bridge financing from this investor and others were also not successful,” he wrote.
Stamos said the company laid off 61 of its 70 employees Tuesday, keeping a small team to deal with loans already in process.
According to CB Insights, Sindeo had raised $25.5 million from investors including Renren, the Chinese social networking company.
Sindeo was a mortgage broker, which means it originated loans for others, but did not fund them itself. Its website formerly said it offered access to “40+ lenders & 1,000+ loan programs to best meet your specific needs and goals” and “closings in as few as 15 days.”
Borrowers, it said, could apply for a loan on a smartphone, tablet or desktop computer and get a preapproval letter in just five minutes. Unlike other companies offering only automated service, Sindeo also had human advisers whose pay was based not on commission but on “customer satisfaction.”
Eric Boyenga, whose South Bay real estate firm had a marketing partnership with Sindeo, had more than 20 clients who got mortgages through Sindeo. “The technology behind it was great. They had really top talent,” Boyenga said. But “the whole tech industry is tightening a bit. All you hear about is Google, Amazon, Facebook and Apple. If you look at the startups, investors wanted to see a higher return, faster.” With Sindeo, “they weren’t seeing what they were looking for.”
Getting a mortgage is a time-consuming process that involves shopping for a loan; choosing from various…