Six Years in the Making

Today, we announced our partnership with Newrez to bring Valon's technology to more than 4 million homeowners. While it may look like a single announcement from the outside, it's really the culmination of 6 years of hard work and a decision we made early that most founders avoid: we earned our way to software by actually doing the operations ourselves first.

In mortgage servicing, we saw a once-in-a-generation opportunity to fix critical U.S. infrastructure and better homeownership for all. As the largest and most important financial asset for most Americans, the home is the nexus and foundation people build on, financially and personally. So when we started on this journey, we knew that solving this problem would be extraordinarily impactful and could become one of the defining accomplishments of our careers.

We knew early that we could not build real servicing software from a distance. The hardest parts of mortgage servicing are in the complex details and edge cases. If we wanted to build the right core infrastructure and prove ourselves to hyper-scrutinized financial institutions, we'd have to deeply understand every aspect of mortgage servicing – from payment allocation to investor reconciliation to escrowed taxes and insurance to default servicing. To do that, we needed an early partner who would let us service loans for them and who also ideally would be a design partner and future software client.

And thus, when we first started, we went to Brian McGrath for ideas. He introduced us to the only person bold enough but also uniquely clear-eyed enough about the problem to help us effectuate a six year covert plan. That person was Michael Nierenberg, the CEO of Rithm (then called NRZ).

We pitched Michael on a plan that sounded straightforward, but most people thought was borderline insane: in order to build software that the industry could trust, we would build a new mortgage servicer that would use our software, learn servicing by doing it firsthand (and at first, we literally did it by hand out of spreadsheets), iterate on the product, create structural cost advantages with our technology, and then deliver the software to the rest of the industry. A plan so ridiculous that many experts laughed at us, including one who promptly said "you don't know what you're doing, kid".

We probably didn't know what we were doing, but Michael nonetheless took a chance on us. Rithm invested early and committed to letting us service loans from Newrez, one of the largest mortgage servicers in the country and a Rithm company. We somehow set up an operating company and got licensed to service mortgages in all 50 states. We got the largest mortgage-backed issuers Fannie Mae, Freddie Mac, and Ginnie Mae to grant us approval to do business. We eventually even got rated and signed contracts with some of the biggest companies in the space.

In the process of scaling the operations, we learned extraordinarily valuable lessons. We repeated the same loop over and over: ops would hit a wall, we would need to remodel data, configure alternate workflows, or productize a feature gap. Day after day, engineering would build and ops would run the process again. That loop, first with ourselves, and now with our software customers, became the core of how we built software.

Today is a full-circle moment for Valon and Newrez. Subservicing for Newrez allowed us to earn trust and prove that the platform generates category-defining cost advantages - with ValonOS, an employee today can service over 3000 loans, compared to an industry average of 750 loans per employee, and we think there is ample room to improve that by at least 3x. Deploying Valon's technology to Newrez across more than 4 million homeowners is the milestone that we have been building toward from the beginning: taking what we proved through operating and delivering it as software at industry scale.

For homeowners, it not only means a better experience, but also a clear path into the future as the rapid evolution of AI alters consumer expectation and homeownership becomes more front and center in the pursuit of the American Dream. Our systems deliver both faster and more personalized resolutions so that homeowners can focus on the important things in life.

We are grateful to Michael and Newrez for making the early bet and for continuing to deepen the partnership. We're also incredibly proud of the relentless work that our team has put into making this a reality.

Six years in the making, and now the work for our next chapter has just begun.

If you want to be part of the team that is rewriting the infrastructure for homeownership, we're hiring.

Andrew & Linda

Build the Future with Us

Every role at Valon is an opportunity to build infrastructure that works for people, not against them.