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Tomo Mortgage on Tuesday announced the closure of $20 million in Series B funding that was led by three existing investors and a new participant.
The funding round was led by prior investors Ribbit Capital, DST Global and NFX along with new investor Progressive Insurance. Tomo, which was founded in 2020 by former Zillow executives Greg Schwartz and Carey Armstrong, has received a total of $130 million in funding to date.
Tomo touts its use of artificial intelligence in streamlining loan underwriting and closing processes. It claims to save the typical homebuyer up to $4,000 in closing costs and offers interest rates that are 50 to 100 basis points lower than the industry average, according to a press release.
The company’s tech-driven approach to lending is proving attractive to investors.
“We’re excited to invest in Tomo and to support their mission to modernize the home buying experience,” Erwin Raeth, corporate development leader at Progressive Insurance, said in a statement. “Our forward-thinking approach and dedication to being there for our customers by understanding their specific needs aligns with Tomo’s focus on innovation and helping each individual customer achieve their homeownership dreams.”
“While other mortgage lenders tout ‘automation,’ facilitated by way of call centers or outsourced service providers, Tomo is the real deal,” said Pete Flint, general partner at NFX. “They’re taking a radically different approach, using proprietary technology to cut out origination fees and processing delays in a way that we’ve not seen in the industry so far. We’re thrilled to back Tomo as they enter the next phase of their growth.”
New headquarters
In conjunction with the funding announcement, Tomo also said it will be moving its headquarters from Stamford, Connecticut, to New York City. The company is licensed in 31 states and Washington, D.C., and it has existing offices in Detroit and Seattle. It plans to use the Series B funding to support team and product growth by “aggressively hiring loan officers and other mortgage professionals.”
According to data from Modex, Tomo did $404 million in loan volume for the 12 months ending in January. The company said in its release that it achieved 250% growth over the course of last year.
In February 2024, the company launched a home search portal, Tomo Real Estate. Powered by OpenAI technology, the portal tailors listings by a user’s property specifications.
In October 2024, Schwartz appeared on HousingWire’s Power House podcast to talk about the company’s AI-driven growth strategy.
“It is not just about turning volume or making a buck,” Schwartz said. “The people that come to work here understand that it’s a startup. It will be a little less consistent every day because we’re inventing and changing day after day, but it’s purpose driven, and that makes my job easier because I get to anchor to something bigger than me.”
