Homebuyers can skip the traditional mortgage process thanks to this startup

Nora Apsel, the cofounder and CEO of online mortgage broker Morty, stands in front of a wall with the company's logo.
  • The online mortgage broker Morty closed a $25 million Series B funding round in July.
  • The company is now focused on growing nationally and expanding the financing options it offers. 
  • CEO Nora Apsel walked us through the pitch deck used to raise the company’s latest funding round. 

Mortgage companies enjoyed record success last year, thanks in large part to historically low lending rates that helped fuel demand for both new home purchases and refinances. 

Morty, an online mortgage marketplace that connects borrowers with a variety of loan options, was no exception. 

In July, Morty announced that it had closed a $25 million funding round, which catapulted the company to a $150 million valuation. In the previous 12 months, its revenue had grown 800% year over year, according to the company, whose model appears to be primed for expansion even in today’s rising-interest-rate environment.

Founded in 2016, Morty provides a platform for homebuyers to evaluate offers from a variety of lenders before closing on a loan using the company’s automated services. The idea is to allow users to effortlessly shop for mortgages online and pick the loan that works best for them. Morty makes its money by charging lenders a fee when the loan closes. 

Mortgage companies flourished in 2020 and 2021 as lending rates plummeted during the pandemic, which encouraged more people to refinance their homes. That translated to record loan volume — in 2020, US mortgage originations totaled $4.1 trillion, with refinancings accounting for 64% of that amount, according to the Mortgage Bankers Association. Last year, the total reached $3.99 trillion, 59% of which came from refinancings. 

With mortgage rates now on the rise, refinancings are slowing dramatically. The Mortgage Bankers Association forecast that refinancing volume in 2022 would reach just $861 million, down from $2.3 trillion last year, though loan volume for new home purchases is expected to remain high.

The mortgage industry has been shedding thousands of jobs as a result, but the slowdown in refinancings is of little concern for Morty, which focuses on loans for new home purchases. Perhaps in anticipation of eventual rate increases, the pitch deck the company showed to investors during its latest funding round said purchase loans were a “less cyclical segment of the market” than refinancings.

“We started with purchase because it’s harder,” Nora Apsel, Morty’s cofounder and CEO, told Insider. “We knew if we did purchase well,” that would distinguish the company from the field, she added.

Apsel is an engineer by trade, but she recognized the challenges of the traditional mortgage process. Sensing an opportunity, she and her fellow cofounders, Adam Rothblatt and Brian Faux, arrived at a vision for a consumer marketplace that could “truly democratize” mortgages. 

“In this marketplace model, we are really about access — how to provide access to the right home-financing solution for anybody,” Apsel told Insider. “That allows us to be the one-stop shop at the top of the bubble.”

Today, homebuyers expect their borrowings, like many other transactions in their lives, to be self-driven and fully digital, Apsel said. Plus, it’s much more efficient and less costly to process mortgages that way, she said, which allows Morty to pass along savings to the homebuyer.

March Capital led Morty’s latest funding round. Other investors included Rethink Impact, Thrive Capital, Lerer Hippeau, Prudence Holdings, FJ Labs, and MetaProp.

Morty has raised $38.4 million to date, the company said. 

Apsel walked Insider through the pitch deck the company used to raise its Series B. 

Mortgage innovation has always lagged behind the overall real-estate industry, Apsel said. But as more consumers transact online, they want to easily get their mortgages online, she said.

Courtesy of Morty

For Morty’s leaders, it was important to start their presentation by focusing on the big vision for the company’s online marketplace, Apsel said.

Courtesy of Morty

“Very often, people talk about the problems in the mortgage industry, about poor communication and high fees,” Apsel told Insider. “Those are not first-order problems. Those are second-order problems. The true problems are about market inefficiencies. Tech-enabled is the way to fundamentally change the industry.”

Morty has been growing exponentially by focusing on loans for new home purchases, rather than refinancings.

Courtesy of Morty

While Morty’s yearly revenue grew 800% year over year, its expenses stayed relatively flat. That was made possible by being “extremely focused on growing through product and tech,” Apsel said, rather than hiring a bunch of people.

Another key point is Morty’s focus on purchase mortgages, not refinancings. As mortgage rates rise, refinancing volume has been falling dramatically, as fewer homeowners stand to benefit by getting a new loan. Morty’s business model insulates the company from those fluctuations, since demand for new home purchases has remained strong.

Rather than pitching an incremental change to the mortgage process, Morty is selling investors on a single point of access for both borrowers and lenders.

Courtesy of Morty

Through Morty, customers can browse loan options, get approved for a loan, finalize their selection, and close on a mortgage. It’s completely self-service, without a phone call and with minimal sales intervention, Apsel said.

“Customers want a more self-service situation,” Apsel told Insider. “They want the security and resourcefulness of a loan expert but also want to be able to operate independently online when they don’t need it.”

Morty has been creating automated workflows and integrations to help facilitate the underwriting and processing part of the mortgage experience, Apsel said.

Courtesy of Morty

The company finds 100% of its customers online, Apsel said.

Courtesy of Morty

Visitors to Morty’s website can enter a few pieces of information to quickly get preliminary loan estimates before going through a more thorough approval process.

Courtesy of Morty

“We need about four pieces of information from the customer to give extremely accurate loan options,” Apsel said. “We built a proprietary pricing engine, and that allows us to give these lender quotes in real time.”

More efficient operations means more savings for homeowners, Apsel said.

Courtesy of Morty

“We have a product that works. We know how to scale it. We know how to acquire the right customers,” Apsel said. “What we want to do in the next stage is do it at a larger level and increase product coverage.”

Courtesy of Morty

In this slide, Morty leaders lay out the company’s advantages in the mortgage industry.

Courtesy of Morty

The latest round of funding will be used to expand the company’s footprint — Morty operates in 43 US states — and to continue to invest “quite heavily” in R&D, Apsel said.

Courtesy of Morty

Morty’s leaders tout their experience as both engineers and entrepreneurs.

Courtesy of Morty