Better will merge with Aurora Acquisition Corp., which is sponsored by Novator Capital. The company will be valued at $7 billion pre-money, and the transaction could be completed this week, according to WSJ.
SoftBank Group recently invested $500 million in Better. It could also donate another $1.3 billion via a PIPE, or a private investment in public equity, which has been common with SPAC mergers, WSJ reported. Better might end up placing $400 million of that amount with other investors. The other $200 million of the $1.5 billion PIPE will come from Aurora.
Better was founded in New York in 2014 and works to provide home loans for consumers through its website and banks like Ally Financial. In 2020, Better had over $850 million in revenue and over $200 million in net profits, WSJ reported.
Better’s trajectory was similar to other mortgage lenders in that it rode a wave of homebuying and refinancing activity as interest rates reached historic lows during the pandemic. Better extended $25 billion in loans in 2020 and $14 billion in the first quarter of 2021, according to WSJ.
In separate news, the Consumer Finance Protection Bureau (CFPB) has been looking into mortgage servicers, PYMNTS reported. The CFPB has an interest in whether they’ve been following the rules of pandemic-era programs intended to keep struggling homeowners out of foreclosure. There have been accusations that homeowners were unable to get the aid they needed or were faced with discrimination.
“We are very concerned and we’re watching closely,” a CFPB official said at the time. “Our supervision team is robustly asking for more data than ever from servicers.”
The end result might be stricter penalties for mortgage servicers that have violated rules or hurt borrowers.