Figure and Sixth Street Unveil New Guarantor Vehicle to Strengthen HELOC Market
Yesterday, Figure announced the formation of a new guarantor vehicle in partnership with major asset manager Sixth Street, marking a significant step toward expanding the secondary market for HELOCs and other lending products. Sixth Street is committing an initial $200 million to this vehicle, which will regularly purchase assets originated by Figure and its lending partners. With leverage, this investment could translate into billions of dollars of committed financing, providing greater liquidity and certainty in home equity lending.
Building a More Efficient Secondary Market
Figure has built a growing network of partners that use its loan origination system (LOS) and processes to create home equity lines of credit (HELOCs). These partners now have the option to sell their production to the new Sixth Street-backed guarantor, offering them a consistent exit strategy and potentially improving pricing and execution.
This initiative builds on Figure Connect, a platform launched earlier this year that enables Figure’s partners to capture capital markets upside by selling their loans to multiple buyers. Now, with the addition of Sixth Street’s guarantor vehicle as a regular buyer, Figure and its partners gain another powerful mechanism to enhance liquidity and market efficiency.
A Blockchain-Powered Evolution of Housing Finance
What sets Figure apart is its use of blockchain technology to improve transparency, reduce costs, and streamline the securitization process. By digitizing loan origination and servicing, Figure has cut third-party review expenses and increased standardization in the capital markets.
Many industry observers see parallels between Figure’s evolving model and the role historically played by Fannie Mae, a secondary market giant that provided liquidity and stability to mortgage lending. If successful, Figure’s blockchain-based approach could become a modern alternative to government-backed housing finance, creating a private-sector-driven secondary market with increased efficiency and reduced reliance on federal programs.
Looking Ahead
The launch of the Sixth Street guarantor vehicle represents another major step in Figure’s vision to reshape housing finance. By combining private capital with blockchain infrastructure, Figure aims to increase liquidity, lower costs, and create a more efficient secondary market for HELOCs and other loan products.
As the broader housing market grapples with rising interest rates and shifting government policy, innovative models like this may play an increasingly critical role in ensuring borrowers continue to have access to home equity financing options. If Figure succeeds in building a truly scalable, blockchain-powered secondary market, it should redefine the future of non-agency lending in the U.S.