Assumable mortgage platform Roam expands coverage area

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With $3 million in new seed funding, assumable mortgage platform Roam is expanding its coverage area to help buyers in new markets including Chicago, Jacksonville and Tucson “wind back the clock” and finance home purchases at rates that haven’t been seen in years.

Technically, any seller who’s still paying off a government-backed FHA, VA or USDA mortgage can offer a qualified buyer the option of assuming the balance of their loan — at whatever rate they took it out at. But the buyer will also need to compensate the seller for whatever equity they’ve built up in their home, so they’ll often need to take out a second mortgage.

In announcing its second round of funding since launching last year, Roam said it’s now partnered with home equity lender Spring EQ to offer second mortgages. Depending on the rate on the mortgage they’re assuming and the size of their second loan, Roam says it can typically provide a blended rate of between 4 percent and 5 percent (see listing on company website).

Raunaq Singh

Raunaq Singh

“For a lot of folks, it feels like a portal to the past, right?” Roam founder and CEO Raunaq Singh told Inman. “It’s like a way to wind back the clock and purchase a home … they didn’t miss the boat on the opportunity to be able to purchase at those low rates back in 2021.”

Roam, which announced a $1.25 million seed funding round in September led by Founders Fund partner Keith Rabois, has now raised a total of $4.25 million. The latest seed funding round was also led by Rabois, with participation from new investors including DoorDash CEO Tony Xu, Figma CEO Dylan Field and Upstart co-founder Paul Gu.

Roam helps homebuyers search for homes with mortgages eligible for assumption and manages the process on behalf of buyers, sellers and agents, charging a 1 percent fee to buyers through closing costs. With its expansion into new markets, Roam says it now provides services to 35 percent of U.S. homes with FHA and VA loans.

Singh said demand from buyers, sellers and agents has been strong, and the company plans to be providing services nationwide by the end of the year.

After the company was featured in a May 9 New York Times story, Singh said he received hundreds of emails from buyers, sellers and agents wanting to know, “When will you be in my town?”

Before partnering with Spring EQ, Singh said Roam would connect homebuyers who needed a second mortgage with a number of smaller preferred partner lenders, which could be an uncertain, fragmented process.

Partnering with Spring EQ provides economies of scale and a streamlined process and, because Roam doesn’t receive compensation for referring borrowers to Spring EQ, they get a better rate.

“They take the fee they may have otherwise paid us as if we were some retail partner, and they bake that into the pricing,” Singh said. “So the customer gets a significant discount and that’s how they win. We have a national lender now, they can work with you in any state that you want to purchase a home in, and additionally, we will give you very competitive pricing because the rebate applies to customers.”

The relationship with Spring EQ is not exclusive, because Roam doesn’t get paid.

“We are just happy to shepherd customers to whoever has the lowest rate and provides the best service in the shortest amount of time to close,” Singh said.

In theory, any mortgage lender can help homebuyers explore their options for assuming a mortgage when buying a home. On its website, New American Funding touts the potential savings on FHA loan assumption closing costs compared to conventional loans.

Roam and competitors like FHA Pro and subscription-based AssumeList say they can also help buyers find homes with assumable mortgages. Multiple listing services often have a “cash to existing loan” box that real estate agents can check to indicate an assumable loan, and homebuyers can search by checking a box for assumable mortgages in the price pulldown menu.

Singh said Roam also has expertise in dealing with loan servicers, who can be tricky to deal with when transferring a mortgage from the seller to the buyer.

“We’ve done an assumption with every single major servicer, and we know most of the people who run the customer service departments, so we can ensure that customers get the best possible service,” he said. “If there’s any issue with their file not being processed in a timely manner, we know who to escalate it to, to ensure it gets unblocked.”

Roam claims its typical buyer saves $12,000 per year compared to buying a home with a conventional mortgage, and can get to the closing table in 45 to 60 days.

In December, the Department of Veterans Affairs (VA) warned lenders and servicers of their obligation to process assumptions in a timely manner and outlined penalties for noncompliance.

“While high interest rates have made most loans attractive for assumption by the buyer, lenders and servicers have been completely unprepared for the assumption requests that have been pouring in,” FHA Pros founder and CEO Chris Gardner advised in a Feb. 29 post on the company’s website.

“The cynic in me tells me that this attitude and ineptitude is intentional, as these companies would rather the low-rate loan be paid off instead of continuing, allowing them a return of their capital to shore up their battered balance sheets, or to lend out at the [then-]current 8 percent interest rates.”

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