Better
Home
&
Finance
Holding
Co.,
the
parent
of
digital
lender


Better.com,
narrowed
its
net
loss
between
the
third
and
fourth
quarters
of
2023
by
more
than
80%,
driven
by
expense
cuts
to
its
platform
and
marketing
efforts.

Going
forward,
Better
is
focused
on
driving
market
share
and
reaching
profitability
in
the
medium
term.
The
digital
lender
made
changes
in
its
commercial
operating
model
to
achieve
this
goal
and
will
continue
to
invest
in
Tinman,
its
proprietary
technology
platform.

Better
posted
a
GAAP
net
loss
of
$59.5
million
in
Q4
2023,
down
from
a
loss
of

$339.4
million
in
Q3
2023,
according
to
its
8-K
filing
with
the


Securities
and
Exchange
Commission
(SEC)
on
Thursday.

For
all
of
2023,
the
New
York-based
digital
lender
reported
a
GAAP
net
loss
of
$534.4
million,
a
39%
improvement
from
a
loss
of
$879.6
million
in
full
year
2022. 

“Throughout
the
year,
we’ve
been
laser
focused
on
prioritizing
expense
reductions
and
improving
our
unit
economics
while
continuing
to
invest
in
the
proprietary
technology
that
underlies
our
competitive
advantage,”

Vishal
Garg,
CEO
and
founder
of
Better,
told
analysts
during
an
earnings
call.

The
operating
model
change
involved
Better
pivoting
to
hiring
experienced
loan
officers
on
commission-based
compensation
plans.
Previously,
the
lender
had
higher
fixed-cost
components
and
no
commissions
for
its
loan
officers.

“Now
we
are
hiring
seasoned
purchase
loan
officers
with
experience
in
nurturing
customers
in
a
higher
rate
environment,”
Garg
said.

“We
are
pleased
to
see
early
conversion
improvements
from
this
new
operating
model
from
the
seasoned
sales
talent
we
are
hiring,
as
well
as
better
alignment
between
our
production
output
and
costs.
Further,
the
seasoned
loan
officers
are
providing
an
increased
level
of
service
to
consumers
that
enable
us
to
improve
revenue
for
loans
while
remaining
market
competitive.”

In
Q4
2023,
Better
generated
a
funded
volume
of
$527
million
across
1,633
loans,
beating
its
goal
of
about
$500
million
that
was
shared
in
its
third-quarter
earnings
call.
The
lender
posted
production
of
$3
billion
across
8,569
loans
in
full
year
2023. 

For
comparison,
Better’s
production
volume
was
$11
billion
in
2022
and
$57
billion
in
2021,
when
interest
rates
were
lower
and
refinance
opportunities
were
plentiful.

About
49%
of
its
Q4
2023
production
volume
was
generated
through
its
direct-to-consumer
channel,
while
51%
came
from
its
business-to-business
(B2B)
channel. 

Approximately
91%
of
the
company’s
volume
last
year
consisted
of
purchase
loans,
with
refis
accounting
for
5%
and
the
remaining
share
coming
from
home
equity
lines
of
credit
(HELOCs).

Better
has
been
launching
digital
products
with
its
proprietary
technology,
including

digital
VA
loans
and
a

one-day
mortgage
product.
About
80%
of
the
mortgages
at
Better
are
now
being
funded
as
one-day
products,
Garg
noted.

Earlier
this
month,
Better
launched
a

one-day
HELOC
product
that
provides
approval
decisions
to
consumers
within
24
hours
of
locking
their
interest
rate.

While
Better’s
products
are
“highly
aligned
to
where
the
market
is
going,”
the
company
has
less
than
half
a
percent
of
the
market
share,
Garg
said. 

Priorities
for
2024

Better
will
focus
on
increasing
market
share
through
investments
in
automation
and
further
expense
cuts,
which
is
designed
to
lead
to
profitability
in
the
medium
term.
The
digital
lender
plans
to
improve
customer
conversion
efforts
by
turning
website
visitors
into
funded
loan
customers,
and
by
expanding
customer
acquisition
via
new
marketing
channels
and
new
partnerships.

For
the
first
quarter
of
2024,
the
digital
lender
expects
to
generate
a
funded
loan
volume
of
$600
million
to
$650
million.

Having
more
liquidity
will
help
the
company
achieve
its
vision
and
corporate
objectives,
president
and
chief
financial
officer
Kevin
Ryan
said.

Better
ended
last
year
with
$554
million
in
cash,
restricted
cash
and
short-term
investments,
a
60%
increase
compared
to
December
2022. 

“In
short,
we
funded
the
balance
sheet.
We
are
now
well
capitalized
for
growth
as
our
cash
position
provides
us
with
the
liquidity
to
continue
executing
against
our
vision
and
corporate
objectives,”
Ryan
said. 

“We
received
strong
relationships
with
our
financing
counterparties
to
manage
mortgage
working
capital
even
in
this
low-volume
environment.
As
of
Dec.
31,
2023,
we
had
three
warehouse
facilities
for
a
total
capacity
of
$425
million.”

Executives
noted
that
the
company
is
watching
how
the
agent
commission
settlement
by
the

National
Association
of
Realtors
(NAR)
will
impact
the
mortgage
industry.
They
noted
that
Better
Duo,
the
lender’s
dual
licensing
program,
should
“play
very
well”
in
the
new
market
structure.

“This
is
going
to
drive
more
consumers
online,”
Garg
said.
“So,
we
think
that
in
the
best-case
scenario,
consumers
are
going
to
have
to
figure
out
how
to
pay
for
a
Realtor
and
they’re
going
to
come
to
try
to
figure
out
how
much
they
can
afford.

“…
The
more
(consumers)
get
online,
the
more
they
will
find
us,
and
the
more
they’ll
find
our
value
propositions
of
speed,
certainty
and
price
attractive
along
with
the
service
offerings
that
we’re
doing.”

Better
is
confident
that
its
development
of
a
“supervised
learning
network“
will
further
automate
many
parts
of
the
mortgage
process.

“Now
where
this
goes
forward
is
…
to
make
it
easier
for
consumers
to
be
matched
to
the
right
loan
officer,
be
matched
to
the
right
loan
product,
as
well
as
all
of
the
back-end
processes
which
require
human
intervention
and
some
use
of
human
logic
for
those
processes
to
then
be
done
by
the
machine
itself,”
Garg
said.

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