Revolutionizing Mortgage Loans for US Expansion... K-Fintech 'Habit Factory' Captivates Locals

Habit Factory, $85 Million Cumulative US Mortgage Loans
2 Years Since US Entry... 97% Local User Rate
Eliminating Inefficiencies with AI and Digital Transformation Technology

Habit Factory, a fintech (finance + technology) startup based on MyData (personal credit information management), is making remarkable achievements by entering the U.S. mortgage market. It is gaining attention locally by innovating the U.S. home mortgage market with digital transformation know-how and artificial intelligence (AI) technology accumulated in Korea.

As of the end of last month, Habit Factory's cumulative U.S. mortgage loan amount reached 85 billion KRW. This achievement came about two years after establishing its U.S. subsidiary in Los Angeles in January 2022 and launching the mortgage brokerage service 'Loaning.ai' in March of the same year. Founded in 2016, Habit Factory operates the insurance comparison and recommendation application Signal Planner in Korea, providing customized product guidance for each customer through AI and automation-based consultations.

[Photo by Pixabay]

Initially, Habit Factory targeted Korean Americans as its main customer base when entering the U.S. market, based on its accumulated know-how from servicing Koreans and the assumption that local Americans would be more familiar with domestic apps. However, currently, 97% of Habit Factory’s service users are local Americans. This shows how a Korean native startup has captured the hearts of U.S. consumers with technology alone.

In June 2022, Habit Factory obtained a mortgage bank license from the California Department of Financial Protection and Innovation (DFPI) and participated in the state government’s loan program called 'Dream for All.' This program offers first-time homebuyers an interest-free loan of 20% of the home price (up to $150,000). However, if the home price doubles at the time of sale, the loan must be repaid at twice the original amount, proportional to the price increase. Habit Factory participates in lending the remaining home purchase funds at an interest rate of 6.625%.

Lee Dong-ik, Co-CEO of Habit Factory.
[Photo by Habit Factory]

Habit Factory capitalized on the fact that U.S. banks are reluctant to participate in government loan programs. Government loans are generally awarded through a lottery after application. If no winners meet the strict eligibility criteria, loans are not executed, causing banks to lose potential earnings. To address this issue, Habit Factory created a page that allows local Americans to easily understand the loan programs and ask questions. Additionally, it digitized the entire loan participation process using Loaning.ai and other tools. This enables local Americans to quickly determine their eligibility and understand the procedures.

Habit Factory raises funds locally through short-term lending institutions called Warehouses. It can draw funds like a line of credit within a limit of 40 billion KRW. The loans are then pooled and securitized into mortgage-backed securities (MBS), which are sold to investors. This process repays the Warehouse funds and secures capital for issuing additional loans. Habit Factory has obtained mortgage bank licenses not only in California but also in Georgia and Texas. These three states account for 25% of all U.S. home transactions.

Lee Dong-ik, CEO of Habit Factory, said, "The U.S. mortgage market still has many areas that are not digitalized compared to Korea, with interest rates set by agents and very slow processes. We will eliminate inefficiencies with our technology, reduce ancillary costs, secure optimal interest rates, and strengthen our position in the U.S. mortgage market."

This content was produced with the assistance of AI translation services.