Canada-based Fraction, a socially conscious alternative for accessing home equity, has expanded into the United States, the company said Wednesday.
Its launch in Washington state comes on the heels of its $228 million debt-equity funding announcement and Series A in 2021, which raised $20 million, with the new capital being used to fuel its U.S. expansion.
Fraction is a digital platform that provides socially conscious financial solutions. Its signature home-equity line of credit (HELOC) product empowers homeowners to access the value locked in their homes with optional monthly payments. When the term ends, the house sells, or the homeowner exits the loan, Fraction is paid based on the appreciated growth of the home.
Many American homeowners lack savings and carry large amounts of debt due to recent pandemic-related unemployment, rising real estate prices, and stagnating wages, the company said, adding that there is an often overlooked opportunity available to U.S. homeowners: their home equity. U.S. homeowners have $26.9 trillion dollars in home equity available, with $670 billion of that located in Washington state alone.
"Fraction’s HELOC is the innovative and tech-forward loan option that American homeowners need to live and age well, giving them access to fairer alternatives for securing investment capital or solving the problem of being house rich but cash poor,” said Hayden James, CEO and co-founder of Fraction. "We’re excited to expand into the U.S,. and Washington is an ideal first state for our roll out given its adjacency to the Canadian market.”
Fraction's loans feature 100% optional monthly payments and are a flexible way of tapping into a home’s equity, it said. With a Fraction HELOC, borrowers can, on average, potentially cut their existing debt payments in half, achieved through eliminating their monthly mortgage payments, the company said.
It offers a first-of-its-kind platform that completely digitizes the entire mortgage application process with the development of a “human-in-the-loop” automated underwriting system. That speeds up the application processing by up to 10 times and offers a mortgage-servicing dashboard, where borrowers can self-serve and manage their optional-payments.
Founded in 2018, the company is headquartered in Vancouver, British Columbia, Canada, with offices in Toronto and in Berkeley, Calif.
Fraction said it plans to launch in additional U.S. states by the end of 2022.
