Friday Harbor Raises $6M to Revolutionize Mortgage Lending with AI

This Seattle startup uses AI to help mortgage lenders compete with industry giants

Mortgage giants such as Rocket and United Wholesale Mortgage have thousands of employees and technical staff. Seattle startup Friday Harbor wants to help all the other lenders who have smaller budgets but can tap into the power of artificial intelligence to stay competitive. Founded last year, Friday Harbor on Tuesday announced a $6 million seed round led by San Francisco investment firms Abstract Ventures and Mischief. The company launched its product in October and has 16 enterprise customers using its software to analyze a borrower's loan file and quickly identify issues in real-time -- some of which are typically caught weeks later by an underwriter. Its system can identify undisclosed debts, large deposits, discrepancies across documents, problems with employment history, and other issues that can cause a mortgage to fall through at the last minute. Customers include Developer's Mortgage Company, NewFed Mortgage, and PRMG, one of the 25 largest non-bank lenders in the U.S. The cost of producing a mortgage has about tripled since 2008, largely due to complex mortgage regulation and investor guidelines, said Theo Ellis, CEO and co-founder at Friday Harbor. That means lenders are looking for ways to keep prices low and process loans faster in the face of rising competition. Ellis pointed specifically to Rocket, which just announced its acquisition of Mr. Cooper, the nation's largest mortgage servicer that manages the ongoing administration of a loan and has direct access to borrowers that may be looking to refinance. "Friday Harbor reduces the number of 'touches' required to originate a loan by catching issues with the borrower's file at the very start of the loan process," Ellis said. "The result is that the lender's salespeople can ask borrowers the right questions, gather the right documents, and submit clean, complete, compliant files to their fulfillment teams." Ellis was previously an entrepreneur-in-residence at Seattle-based AI2 Incubator, a vice president at mortgage company Altisource, and an exec at fintech company Pagaya Technologies. He co-founded Friday Harbor with Jesse Collins, who was also an EIR at the AI2 Incubator, and was a software engineer at Affirm, Fast, Zillow, and Curalate. Friday Harbor has eight employees and has raised almost $8 million to date. Other backers include AI2 Incubator and Wischoff Ventures.

Friday Harbor raises $6m for AI-powered mortgage origination

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. The round was led by Abstract Ventures and Mischief, an early-stage venture VC fund co-founded by Plaid CEO Zach Perret. Wischoff Ventures and the AI2 Incubator participated. Friday Harbor's platform helps lenders of all sizes tap AI to read and interpret borrower documents, generate a borrower-specific needs list, underwrite files and flag potential conditions in real time. Each flagged issue includes a suggested resolution, enabling loan officers to take action with a single click. This, claims the startup, compresses a process that typically takes weeks of back-and-forth into just minutes, reducing downstream friction and accelerating time to close. The funding will b used to build out Friday Harbor's engineering team and support integrations with mortgage LOS and point-of-sale platforms -- paving the way for more lenders to automate file setup and accelerate underwriting. Theo Ellis, CEO, Friday Harbor, says: "Thousands of lenders deserve access to the same tools as the mega-lenders -- and in many cases, they're now doing things the biggest players can't. That's what happens when you give lenders technology built by people who truly understand both AI and mortgage."