An emerging proptech company that has made its mark helping tenants and landlords avoid eviction is aiming to dramatically broaden its ability to help renters become homeowners.
Esusu, whose data platform captures and reports rental payment activity to the three credit bureaus, has raised $10 million in a Series A funding round led by Motley Fool Ventures. Joining in are tennis legend Serena Williams, through her Serena Ventures, along with The Equity Alliance, Predictive VC, and angel investors.
A previous seed round of $4 million included Concrete Rose Capital, Impact America Fund, Global Impact Fund, Next Play Ventures, and Zeal Capital Partners.
The cash infusions are intended to give scale to the company’s ability to partner with property managers who supply the rental histories, helping renters build credit and landlords maximize their property outcomes, Esusu and Motley Fool Ventures said in the announcement.
A housing stability fund steps up, major property managers connect
Since its launch in 2018, Harlem, New York-based Esusu has become the nation’s largest provider of rent-reporting data, helping tenants build credit and improving property outcomes for managers and owners, including through its zero-interest housing stability fund, the company said in the press release.
That has made a mark during the pandemic, Esusu said, surpassing $70 billion in outstanding rental payments that helped keep cash flowing to rental property owners and tenants in their homes.
Esusu said it now connects the three major credit bureaus -- Equifax, Experian, and TransUnion -- with 30% of the largest landlords on the National Multifamily Housing Council (NMHC) list, including such names as Related Companies, Winn Residential, L+M Development Partners, Goldman Sachs, and Camden Property Trust, a residential real estate investment trust (REIT) that owns about 170 apartment communities in 14 major markets across the Sunbelt.
Esusu said that it extends its rent and credit reporting ability to 2 million homes, giving tenants a better chance of qualifying for a home loan should they choose to go that route. Esusu was founded by children of immigrants who saw how their parents were disenfranchised as well as the tendency for certain communities to be underbanked. Knowing the impact of these circumstances, they wanted to make a difference.
That was also what attracted the tennis star and other backers to the company and its aim to deliver on the double bottom line of doing good while doing well.
"Esusu is really focused on credit building and creating pathways to financial inclusion not only for working families but for individuals as well," Williams told CNBC.
Fannie Mae to consider rental histories
The move to include such factors as reliably paying utility bills and rent in underwriting criteria has been gaining traction, including a major boost in August when the Federal Home Financing Agency (FHFA) said Fannie Mae would allow lenders to include rental payment history in home loans that would be then sold to that government-sponsored enterprise.
"For many households, rent is the single largest monthly expense. There is absolutely no reason timely payment of monthly housing expenses shouldn't be included in underwriting calculations," FHFA Acting Director Sandra Thompson said in that announcement.
"With this update, Fannie Mae is taking another step toward understanding how rental payments can more broadly be included in a credit assessment, providing an additional opportunity for renters to achieve the dream of sustainable homeownership," Thompson said.
The Millionacres bottom line: The power of fintech
"Esusu is an excellent example of an innovative fintech company leveraging technology to deliver scalable and much-needed financial solutions for underserved populations," Ollen Douglass, managing director of Motley Fool Ventures, said in the Esusu announcement.
It can also add some buyers to the market. Home prices are rising, but rents are even faster, and renting a home right now costs more than buying a "starter" home in many places, including 24 of the nation’s largest markets.
People who can foot that monthly bill responsibly certainly deserve a shot at homeownership and all the personal, family, community, and societal benefits that go with it. Considering that, payment performance in underwriting decisions shouldn’t be a heavy lift. As the FHFA said in its announcement, "There is no additional burden -- either for the borrower or for the lender -- to make use of this feature."