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How Cloudvirga Wants To Disrupt The Slow, Antiquated Mortgage Industry

Story by Benjamin F. Kuo

 

For anyone who has ever gotten a mortgage for a home, they know it's a very slow, antiquated, frustrating, and time consuming process. It's also very expensive and complex for lenders. Enter cloudvirga (www.cloudvirga.com), a new startup in Irvine—created by veterans of the mortgage industry—which is hoping to disrupt that antiquated process, by automating the entire process. Cloudvirga recently raised $7.5M in funding, from Dallas Capital, Upfront Ventures, and Tribeca Angels. We spoke with Kyle Kamrooz, co-founder and COO of the company, about what the startup is doing.

What is cloudvirga?

Kyle Kamrooz: We were spun out of a lender. We had started out as a project to build out a better consumer experience for borrowers, the people who are buying or refinancing their home. We wanted to be as transparent as possible, and do as much as possible for those borrowers. What ended up happening, if you fast forward, is as we were building more and more of that system, we realized that there was lots of inefficiently in the whole loan process. So, instead of just dealing with the consumer experience, we decided to tackle the problem head on and build an entire platform, and intelligent mortgage platform. Because of that, we got lots of interest from big lenders and banks, and spun out.

For those of us not very familiar with the mortgage process, explain the problem you are solving for those lenders and banks?

Kyle Kamrooz. The problem is, there is an epidemic. The mortgage process is very rigorous, because it's the biggest financial thing you'll do in your life. Because of that, it's very antiquated, both in terms of the process and the technology used. If you look at some of the statistics, getting a home loan is like pulling teeth, and it gets very poor customer ratings. The process itself takes anywhere from 30, to 50, tyo 60 days to get a loan. It's just ridiculous. It shouldn't take that long for a home mortgage. That's the problem—it's just so costly, expensive, and time consuming to produce a loan, yet the world of technology and automation is just an area the mortgage industry hasn't leveraged.

Why hasn't this been done before?

Kyle Kamrooz: Unfortunately, it's because it's a very complicated process. You have to understand the lending process to tackle it. This isn't something like disrupting social media or buying a car. This is a trillion dollar industry, which almost brought the world down, and is very complex, and has lots of moving pieces. You can't come in, if you do not understand the mortgage industry, and try to disrupt it. It just won't work. For those who do understand it, they are so used to the technology today I the space, which is very anitiquated. For them to get to date with the times, to automate and build a platform, they'd have to reinvent and re-engineer their entire platform. Even though consumers, who maybe do an online application at Rocket Mortage or online at other lenders might see a nice, pleasant experience for the first hour, it still take thirty to 40 days to close a mortgage.

Do all the many regulations about mortgages make it harder to automate this process?

Kyle Kamrooz: It actually makes it a bit easier for us. It's complicated, but it makes it easier, because there are rules driven off the data. There is more and more data available than ever before, people just aren't using it. The platform that lenders are using today they just can't leverage. It's plan and simple. There are a lot of moving parts. Our main focus is B-to-B-to-C, our mission—which we call our movement--is to reduce the cost to produce a mortgage by 60-70 percent. We think there's that much fat in costs on a mortgage. Who is eating that cost? Me and you as homeowners.

So what's your background, and how'd you get into this business?

Kyle Kamrooz: I'm 36, and I've been in the mortgage industry for seventeen years. I started young, buildilng on my father's lending company. I have built large fulfillment companies and lenders. In my 20's, I was already doing serious volume, and ended up closing on 6 to 7 billion in mortgages with 400 to 500 people reporting to me. So I've spent a lot of time in the mortgage industry. I'm passionate about changing this industry. My counterpart, Mark Attaway, our CIO, was at Fidelity national and LSI, both title companies, building automated platforms for the title process. He did that with huge success, in a field where they are very few who have been able to, building an enterprise platform which can scale, is automated, and is able to drive down costs. Bill Dallas, our CEO, has been an industry icon for 30 years, and built a massive mortgage company, which he sold to Open Market, for hundreds of millions of dollars. He's my mentor, and I've known him since I was nineteen years old, when he was an Adjunct Professor at Pepperdine. I've now known him for half my life.

So where are you now with the company?

Kyle Kamrooz: Where we are right now, is we've signed up some of the largest lenders in the country, who are just starting to install our software. We're looking to start increasing the number of lenders, and building out the product, expanding it, and really being able to leverage it to get the costs of producing down. We're still building this, and we're working on multiple products. We want to create a single platform so that we can truly leverage all of these things I told you about.

What's the toughest challenge in this whole enterprise?

Kyle Kamrooz: The biggest thing is probably how big of a change this is. We're truly doing automation of the process, and anytime you try to disrupt something, especially something as big as lending, which is massive, there's the change factor. There's the shock factor, where some people will embrace it, and some won't. That's one of the biggest things we are looking at, because we're radically changing the entire funnel. Either people can accept that, or not, but it's a movement, and we believe that in five to ten years from now, if people don't go down the path of what we're going to do, they'll have a hard time surviving as a lender, because it will cost them so much more than everyone else.

Thanks, and good luck!