Written by: James Dornbrook, KCBJ
Lead Bank agreed to become the finance partner for a new fintech called ClosingCostHelp.com that helps veterans finance closing costs on home purchases.
The Kansas City area has been one of the nation's most active areas for loans to veterans. One of the biggest barriers veterans face on the path to home ownership are upfront costs, which is why the U.S. Department of Veterans Affairs offers a 100% financing benefit on mortgages. But that doesn’t include closing costs, which average about 3% to 5% of the purchase price.
“Many veterans and just your average Americans, in general, can’t afford $10,000 out of pocket but could easily afford it every month,” ClosingCostHelp.com CEO Josh Kaplan said in a release. “We cannot be more excited to partner with Lead Bank and to help get more veterans into homes, setting them up for long-term financial success.”
Lead Bank CEO and Vice Chairman Josh Rowland said the problem with closing costs is that there is really no collateral to secure a loan on them, which creates a sticky situation banks haven’t solved. But ClosingCostHelp.com can originate lots of short-term, small-dollar loans that can spread the risk out more, making it more palatable.
“We believe ClosingCostHelp.com came up with a good underwriting model and that the loans are priced appropriately,” Rowland told the Kansas City Business Journal. “We think we can basically spread the risk out across our borrowers.”
Lead Bank has locations in Lee’s Summit and the Crossroads Arts District. It has been an active partner for fintechs, allowing them to use the bank’s platform, which in turn has been driving Lead Bank’s growth. Its loan portfolio increased 48.08% to $448.43 million by the end of 2020, driven in large part by its partnership with fintechs.
Those partnerships include deals with Dama, a San Francisco fintech that provides a payment system for businesses in the marijuana industry; Self, a fintech in Austin, Texas, that helps clients repair or build their credit; and Hyphen Funding, a Prairie Village-based operation that provides short-term loans to small and midsize businesses.