San Diego, Calif.-based shared equity investment provider Splitero has expanded into two new states beyond its initial footprint: Colorado and Washington. The move marks the beginning of broader ambitions for the relatively new company that offers a way for homeowners to tap into their equity without the assumption of additional debt.
While the company works on realizing its broader goals in what CEO Michael Gifford describes as a “methodical” approach, he told RMD in a recent interview that in addition to seeing high levels of home equity in the new states it operates in, the challenges being faced in the mortgage industry specifically are not necessarily felt in the shared equity investment business.
“I think in any times of uncertainty, people are generally trying to solve for cashflow, first and foremost,” he says. “We have a product where they don’t have any monthly payments on it, we don’t dynamically shift our pricing with Fed rate hikes as much. That has certainly given fewer options to homeowners as well. There’s no income qualification for our product, and so homeowners are able to access the equity in their house without the DTI requirement.”
It also comes down to transaction volume, Gifford says.
“Mortgage markets do well when there’s a lot of transaction volume, whether it’s purchase or refi,” he says. “Right now you have a lot of homeowners that don’t want to sell because they have a lower-priced mortgage for one reason or another. They don’t want to sell because they don’t know what they’re going to buy. Rents are still really expensive.”
In an interview this past summer, Gifford said that the possibility of partnering with reverse mortgage companies to place borrowers who may not qualify for one product or another was an attractive prospect. Now, those partnerships are beginning to take shape, he says.
“There has been [some progress],” he says. “We have a few small partners right now, and we’re slowly moving into that space as well as expanding our core business. I think that is certainly something that we would love to work with the reverse mortgage community on. Somebody that, say, can’t qualify, or they’re outside of the box, or they’d like to [seek out] a different option. We’re happy to work with licensed entrepreneurs.”
That being said, while Splitero and products like it do not have age limitations, seniors are a natural constituency due to the amount of equity they typically have built up in their homes, Gifford said.
“We do have a lot of seniors in that category reaching out for reasons like [fixed income challenges],” he said. “We’ll work with any homeowner, and the senior community tends to have a significant amount of equity built up in their home. We’re happy to help them access it.”