Figure gets $200 million boost to grow credit marketplace

Figure Technology Solutions, parent company to Figure Lending, has tapped financing that will help it scale its operations.

Sixth Street, a San Francisco-based investment firm, will front $200 million of equity to Figure through a joint venture vehicle, both companies announced Thursday.

Specifically, the investment will be used to further prop up Figure Connect, a blockchain-based private capital marketplace the company launched last year.

The joint venture puts "Figure Connect on a trajectory that is ultimately intended to lower costs for lenders and borrowers, similar to how borrowing costs were lowered with the introduction of TBAs in the agency mortgage space," said Todd Stevens, chief capital officer at Figure.

It also has the potential of bringing over $2 billion in liquidity to the non-agency mortgage market because the commitment can be recycled and used for future Figure production.

"We're thrilled to form this joint venture with Figure and its Figure Connect marketplace platform, which we believe is a stand-out leader that can support the evolution of home equity as well as the broader private credit market," said Michael Dryden, partner at Sixth Street.

Originators using the Figure Connect platform can receive forward commitments from buyers, lock active bids, control loan pricing to balance profitability and volume, and deliver pools of loans into those commitments. Lenders including The Loan Store, Movement Mortgage, Bayview Asset Management and Saluda Grade use the marketplace.

Mike Cagney, the founder of Figure, has previously hinted that the private credit marketplace could go beyond offering just mortgage loans.

"The Figure LOS that our partners use today not only originates HELOCs, it is designed to to originate everything from auto to first lien mortgage loans using the same automated processes," Cagney wrote last year. "We believe Figure Connect benefits from economies of scale and diversification of credit, while lenders capture a much lower origination cost coupled with certainty in takeout. This combination makes every market - including conforming loans - open to change."

In recent years, Figure Lending, a subsidiary of FTS, has dominated the home-equity line of credit space, with its software being used to originate more than $13 billion of home equity, per its website.

Megalenders such as Rate, CrossCountry Mortgage and Movement Mortgage have partnered with the company to offer HELOC products to their own customer base.