The round was led by Arthur Ventures, a leading early-growth capital firm focused on high-growth, capital-efficient B2B software companies.
Candor burst onto the scene last summer at the height of the COVID-19 pandemic, making a timely debut at a time when many mortgage lenders were struggling to hire qualified underwriters. Candor has built an AI platform that helps to automate decisions around income, assets and lending, and says its technology is meant to augment humans in order to increase their productivity.
The company has already landed a number of impressive clients, including top lenders such as American Pacific Mortgage, American Financial Network, American Financing, Alcova, Florida-based FBC Mortgage and Homestar to name just some.
Despite being a new player in the underwriting tech scene, Candor already has plans to expand into adjacent industries. For instance, it has developed technology that enables it to process loans for self-employed borrowers, which can be a very time consuming task in underwriting. In addition, Candor has also developed specific Federal Housing Administration and Veterans’ Affairs underwriting products too.
Candor is further looking at expanding into automated appraisals, with a tentative launch date of the first quarter of 2022 already penciled in. And it also has an eye on automating title insurance processes, it said this week.
With so much on its plate, it’s no surprise that Candor needed some money. Candor founder and Chief Executive Thomas Showalter has experience in pricing loans on the secondary market, and he told HousingWire in an interview that he realized much of those processes could be automated by applying decision science to them.
However, he told HousingWire that human underwriters must still play a critical role.
“Candor does the low-level tasks, and it does them in a way that a typical underwriter, because they are human, cannot do,” Showalter said. “But we still look to the human underwriter and need human intelligence to decide, “Is this loan okay or not?” and, “If I were to move this forward, would this be a good thing to do?”
Candor’s offering has a lot of appeal to lenders. It means their human underwriters can handle far more loans as it performs many of the menial tasks for them, freeing them up to focus on the big decisions.
Candor’s AI platform involves an incredible 37,741 “decisioning steps”, Showalter explained, with each step representing a narrowly defined problem. Those steps form a dynamic path of decisions, he said, before arriving at a valid solution.
Arthur Ventures General Partner Patrick Meenan said Candor has solved an extremely complex problem in underwriting by effectively teaching computers to think like underwriters.
“This has enabled Candor clients to make revolutionary improvements in the economics of making a mortgage,” Meenan said. “And their leadership team is first rate.”