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Online bank Ally Financial<\/strong> recorded a $136 million impairment related to its investment<\/a> in struggling digital mortgage lender Better.com<\/strong>, bank executives said Wednesday during the company’s third-quarter earnings call. <\/p>\n The bank disclosed to shareholders and analysts that the $136 million impairment was a “nonmarketable equity investment” related to its mortgage business.<\/p>\n “Following the impairment, our investment has a remaining carrying value of $19 million, so this has been effectively derisked,” CEO Jeff Brown said<\/a> on the call. <\/p>\n Better.com, founded by Vishal Garg in 2014, grew tremendously during the pandemic, capitalizing on a historic refinancing wave and homeowners’ growing comfort in an all-digital mortgage experience. Better grew from roughly 2,000 employees and $4.9 billion in volume in 2019 to 10,000 employees and $58 billion in origination volume in 2021.<\/p>\n But the company\u00a0\u2013 which has raised $905 million across several funding rounds and got a $750 million loan from SoftBank in 2021 \u2013 has run into major trouble. It took a major public relations hit when Forbes reported on Garg’s aggressive management style<\/a> and past controversies, as well as the infamous mass layoff<\/a> on Zoom. <\/p>\n Better is also facing a lawsuit from Sarah Pierce<\/a>, its former CFO, that claims she was pushed out after complaining that the company’s “black box” financial were misleading investors. The Securities and Exchange Commission<\/strong> took notice.<\/p>\n But above all else, Better’s biggest problem appears to be about fundamentals. The company continues to lose tons of money \u2013 it lost $221 million in the first quarter \u2013 and it’s struggled to gain traction in a purchase market that is also slowing. <\/p>\n The company’s plan to go public via a special purpose acquisition with Aurora Acquisition Corp.<\/strong>, initially slated<\/a> for the fourth quarter of 2021, is unlikely to happen given market conditions. <\/p>\n In recent weeks, Garg has sought out the press to tout its new direction, which includes a “Zillow-like website for mortgage applicants to find homes they can afford,” according to Insider. Better is also building a home-action tool that the company believes will allow preapproved mortgage holders to bid on homes and purchase them without broker fees.<\/p>\n Ally, one of the country’s largest vehicle lenders, invested in Better in 2019, though it wasn’t clear at the time how large its investment was.<\/p>\n In the first half of 2022, Better originated $8.7 billion, slipping to the 34th largest mortgage lender in America. Its origination volume dropped 67% from last year, according to Inside Mortgage Finance. Among the top 50 lenders, only Freedom Mortgage<\/strong> had a bigger decline in origination volume, at 75%. <\/p>\n The post Ally Financial takes a big hit on Better.com investment<\/a> appeared first on HousingWire<\/a>.<\/p>\n