Social Finance has acquired the engineering and product teams of mortgage startup Clara Lending, bolstering the financial technology company's offerings beyond student-loan refinancing, according to people familiar with the matter.
In just over six years, SoFi has built one of the largest student-loan refinancing businesses in the U.S. and had at one point aimed to create a bank for millennials, with products from insurance and mortgages to wealth management. Now, San Francisco-based SoFi is struggling to recover from last year's debacle of lawsuits over claims of sexual harassment and fraudulent actions by managers. Earlier this week, the company announced that Twitter Inc.'s chief operating officer, Anthony Noto, would become SoFi's chief executive officer in March, replacing Mike Cagney, who resigned last September.
SoFi confirmed the acquisition on Friday and said taking on the Clara teams allows it to "immediately ramp up our technical capabilities."
While the mortgage business is only a small part of SoFi compared with loan refinancing, it's riskier because the firm holds many of those loans on its books rather than securitizing them.
SoFi has plans to hire about 100 engineers, one of the people familiar with the matter said, and Clara filled about 20 of those spots. Founded by a former policy advisor at the U.S. Treasury, Clara created an online platform for loan applications.
The startup has raised $24.3 million in funding from lead investors Redpoint Ventures and Venrock and had fewer than 100 employees, according to PitchBook Data. The terms of the deal were not disclosed.
Last year, SoFi originated $12.9 billion in mortgage, student and unsecured personal loans, Ashish Jain, senior vice president of capital markets, said during a series of presentations to reporters on Tuesday.
SoFi packed about $8 billion of that into securities, issuing $6.9 billion in bonds sold to investors, and sold another roughly $2 billion of loans to buyers such as regional banks. Much of the rest remains on SoFi's balance sheet, Jain said.
