Modern mortgage finance in LATAM: Our Investment in Yave

written by Vyshakh Kodoth

Financing a home purchase with a mortgage is often the most significant personal financial transaction one will make. In the US, the mortgage transaction, notoriously rife with process inefficiencies, is in the midst of a significant tech-driven overhaul. At MetaProp we have been investing for the better part of a decade in companies like Morty, Staircase, and others that are leading this charge by introducing digital solutions into, and removing inefficiencies from, the home lending value chain.  

In Latin America, however, many of these same inefficiencies unfortunately remain, despite large and growing demand for change from lenders and borrowers alike.

Conversations with homeowners across the region reveal story after story of pain points from their mortgage lending journey. In addition to experiencing long application cycle times, restrictive approval requirements, and poor customer service, the homebuyers we have spoken to noted deep frustration with the outdated formats in which much of the process takes place: back-and-forth phone calls, in-person branch visits, and tedious paperwork. 

LATAM-based lenders and real estate partners are similarly disillusioned by the unpleasantness of the process, and ill-equipped to develop technological solutions in-house to improve their services.

The result has been a lending environment in LATAM in which both lenders and borrowers incur significant financial damages from the origination process. It takes 8-16 weeks on average from mortgage application to funding, and on the home seller and lender side, it is estimated that ~92% of qualified leads are lost due to mortgage application inefficiencies, contributing to substantial loss in market value.

Enter Yave.

Yave is developing the modern operating software to power digital mortgage lending in LATAM. Through a combination of a digital loan origination platform and back-end infrastructure, Yave partners with lenders and homebuilders to streamline the process of securing mortgages for their customers and servicing their loans, all through a web-based interface.

The company has adopted a unique business model that draws upon successful elements of the American digital mortgage business model (e.g. automated underwriting, removal of redundant document requests) while being mindful of the differences in the nature of home buying in Mexico (e.g. customers transact with the homebuilder first before applying for financing). 

Loan applications with Yave take 10-15 minutes to fill out and customers can be pre-approved in real-time. On average, it takes 3-5 weeks from application to funding for Yave customers. After originating a loan, Yave will sell the mortgage to other financial institutions (banks and mortgage REITs), so as to not maintain loans on their own balance sheet. 

MetaProp believes that Yave is an asset-light business well positioned to grow quickly in the Mexican home finance market, which, as we’ve talked about before, is more nascent in its PropTech development but has given rise in recent years to numerous fast-growing and highly-valued startups bringing adjacent models that first gained favor in the U.S. to Latin American markets. We are encouraged by the fact that Yave is already the largest non-bank loan originator in Mexico today, having originated over $100M in loan volume to-date through their platform. 

The Yave team, led by Bernardo Silva, has the ideal combination of relevant product experience and operational acumen. Bernardo is a second-time entrepreneur who previously founded Bancompara, a successful mortgage comparison startup, and Yave’s COO Andres Avalos Aguilar has had a similarly impressive background at McKinsey. We’re excited to co-lead their Series A alongside our friends at Better Tomorrow Ventures, and join the team on its mission to streamline the home lending process for LATAM.