Michael Gifford and David Zvaifler‘s home equity investment company, Splitero, lost its main investor, Redwood Trust, HousingWire has learned.
According to an internal presentation deck, the startup had secured more than $1 billion in committed capital. Out of that figure, $750 million was supposed to come from Redwood, representing 75% of the total capital. Atalaya committed $250 million while Kingsbridge put up $50 million. A source who received the deck from Splitero provided it to HousingWire on the condition of anonymity.
In September, Redwood launched its in-house home equity investment (HEI) origination platform called Aspire. The platform aims to “directly originate HEIs by leveraging the company’s nationwide correspondent network of loan officers and establishing direct-to-consumer origination channels,” the company told HousingWire.
During a phone interview with HousingWire on Oct. 16, Gifford said that Redwood stopped buying home equity investment (HEI) contracts prior to the launch of Aspire. Gifford also specified that Redwood was buying HEI contracts from different parties in the space and then pulled back from its commitments.
He added that Splitero was looking for other investors and hinted that the company would have some good news to share soon.
Gifford declined to discuss the company’s financial performance in 2023. According to its website, though, Splitero has closed 3,160 HEI contracts since its launch in 2021, totaling over $250 million in investments.
“Personally, I think it’s a great proof point for the space. Redwood trust is a well-respected institution,” Gifford said of Aspire’s launch. “I think it brings a lot of legitimacy to the product in the space. And so we are wishing them nothing but success on that.”
Redwood declined an interview for this story, but provided an emailed statement from John Arens, Redwood’s managing director and head of HEI:
“We have not shared any plans on additional investments in HEI operators. We remain focused on driving capital and financing to the sector, to provide long-term product solutions that benefit both homeowners and investors. This includes Aspire, Redwood’s new in-house HEI origination platform.”
Splitero’s website states that the company is currently experiencing “overwhelming demand.” As a result, the company temporarily stopped taking new HEI applications from homeowners.
“At this time, our primary focus is on funding homeowners who have already completed an application,” the company shared on its website.
Splitero currently operates in selected parts of California, Colorado, Oregon, Utah and Washington.
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