Mike Cagney’s Figure Launches Blockchain-Powered Online Home Equity Loans

Mike Cagney first made his name in financial services as the founder and CEO of SoFi, an alternative credit startup that got its start re-refinancing student loans for graduates of elite universities. SoFi grew up quickly, expanding both the number and types of products it had on offer (mortgage loans, personal loans, wealth management services and life insurance) and its ambitions for what type of firm it wanted to be.

It briefly looked as though SoFi was on the verge of becoming a bank itself — though as it turns out, that ambition was never to be. Shortly after SoFi began to embark on the process of seeking a bank charter, Cagney stepped down from SoFi’s helm in September 2017.

After his departure from SoFi, Cagney moved quickly on to his next venture: Figure Technologies Inc, a new online lending venture built around using the blockchain to offer cheaper, faster and more efficient digital loans products.

Figure rolled out the first of those products yesterday: a digitally processed home equity loan that it claims can cut approval time to five minutes. According to Cagney, those Figure loans can range between $15,000 and $100,000, with funds made available to users in five days — down from the 45 days that such products usually take.

According to Figure, home equity loans carry lower interest rates and monthly payments than do personal loans — but personal loans are so much easier to secure (not to mention faster) that consumers often opt for the more expensive form of credit simply to save time.

“You have a lot of documentation to upload, a lot of expenses and trips to the notary, and so people avoid it and just prefer to take out a personal loan or credit card loan,” Wendy Harrington, chief marketing officer at Figure, said in an interview.

Figure leverages blockchain technology to record and track information on the loans, which in most other ways will be fairly typical home equity line offerings. Annual percentage rates will start at around 5.99 percent and borrowers will be able to repay in five, seven, 10 or 15 years. The company will charge an origination fee ranging from 1 percent to 3 percent of the initial drawn amount.

Figure is available in 25 states — and holds all of the loans on its balance sheet. But both of those things are due to change, Harrington says.  Figure aspires to be up and running in all 50 states by the end of next year — and plans to securitize and sell at least some of the loan packages they create.

The firm also plans to extend its product offerings beyond home equity.

For its second product, Figure will innovate a reverse mortgage which allow homeowners to sell and lease back their property over time.  No word yet on what that product will look like exactly.

The firm has raised $50 million from investors, including venture capital firms Ribbit Capital and DCM.  Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission, is an adviser to Figure.