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No. 03 · The observatory

Valon

Servicing-first entry into mortgage software. Contracted scale outruns live migration.

Status
Open
Case
One of eight recorded cases
The observatory in the gingerbread village
Snapshot
Scored 2026-10-05, reported 2026-10-09
Milestones
10 recorded, 2 with an exact day
Limits
Partial and unavailable dates stay as recorded text. The timeline plots exact days only.

Valon

Valon replaces the mortgage servicing core held by ICE’s MSP and Sagent. It ran its own servicer on its own core for six years as the proof. Then it sold the servicer to Carrington, which adopts ValonOS as core. Its headline scale is contracted future migration, not completed cutover. No MSP shop has publicly confirmed a move; Newrez was never on MSP.

Sources:

The market it attacks

The servicing core runs loan setup, escrow, investor reporting and compliance. ICE’s MSP ran about 36 million loans in FY2022 of roughly 66 million liens. PennyMac said Black Knight controlled over 62% of the first-lien market. ICE paid $11.9 billion for Black Knight in September 2023. ICE’s servicing software revenue was $871 million in 2025, up 3%. A 2026 MSP job post still asks for z/OS, COBOL, CICS, JCL and DB2 skills. Black Knight told investors a switch can take 12 to 18 months or longer. Its contracts typically span five to seven years. Black Knight sued PennyMac in 2019; PennyMac countersued on antitrust the next day. A 2023 arbitrator awarded $155.2M for breach of contract and rejected trade-secret claims. PennyMac, a litigant, called MSP outdated mainframe green-screen technology. Sagent counts some 8,800 rules a servicer may face. PennyMac said Black Knight charged extra to exchange loan data with MSP via its tools. A few large servicers run their own cores: PennyMac’s SSE, Newrez’s ServicingDirector. Sagent, the other large vendor, now sells its newer Dara platform.

Sources:

Origin and the first wedge

Founded as Peach Street in New York in June 2019; founder lists differ by source. An early backer says neither Du nor Wang had ever serviced a mortgage. Wang’s trading work showed noisy data from archaic servicing systems. Founders expected zero trust: servicers had already spent millions and failed. So they built a regulated servicer first, software second. Servicing costs climbed; a16z cited $59 to $156 per loan from 2008 to 2013. MBA puts 2024 cost at $176 per performing loan and $1,573 per non-performing one. Over 5% of mortgages sat in forbearance in early 2021. The host credits a COVID-era expedited approval program for the breakthrough. Valon launched mobile-first; the AI-native pitch came after late 2024. PennyMac’s 2019 exit showed a big servicer could leave MSP, at a price.

Sources:

The first customers

The wedge was subservicing conventional agency loans for MSR owners. Anchor Rithm (then NRZ) invested early and committed Newrez loans. A master servicer can hold several subservicers, so a slice needs no core switch. Fannie Mae approved Valon by February 2021, on a new proprietary system. Freddie Mac and FHA followed in 2021; Ginnie issuer approval came December 2024. Full Ginnie servicing was still being built in June 2026. At end-2023 Valon subserviced $25.9B, 4.9% of the UPB behind Rithm’s MSRs. That was close to half of Valon’s $55B book. By end-2025 Valon subserviced 3.6% of Rithm’s MSR interests. No public record shows which investors beyond Rithm sent loans. Wang says he sold over $100 million of recurring revenue and contracts, mostly alone. The Mortgage Scoop, not Valon, wrote it had no branding, sales or marketing. The first loan was hand-mapped field by field in a spreadsheet. Valon went from 75 homeowners ($14.5M) to 24,000 ($5.62B) in 2021. It boarded 15,000 mortgages in one 31-day stretch. Over 70% of homeowners registered online in 2021; satisfaction averaged 93.6% in late 2022. Subservicing commitments reached $10 billion in about a year. Software sales run slower: Carrington watched from inside for over a year. Software contracts run five years or longer, paid on measured AI savings. Newrez bought the software about six years after Rithm’s first bet. Major players spent about $1B a year on servicing fees; Valon aimed for 10% cuts. ACV figures conflict: Du says millions, the Scoop wrote $100 million-plus.

Sources:

How big it is now

Raises: $3.2M seed, $50M Series A in 2021, $43.9M Series B at about $590M. A $100M Series C came in October 2024 at $1.1 billion. A February 2026 strategic round gave Rithm long-term minority equity ownership. Reported totals run $230M to over $290M; listed rounds sum $197.1M. Du mentions a raise around mid-2022. Forbes dates a $1.75 billion valuation to July 2024, pre-dating the Series C. 2023: over 350,000 homeowners and $55B serviced on 274 staff. 2025: 593,000 loans, $86 million revenue and 469 staff. February 2026 claimed top-ten servicer status, $110B-plus, three top-ten deployments signed. May 2026: about 800,000 loans and $197 billion UPB, mostly subserviced. Servicing staff moved to Carrington with the sale; one report counts 320 employees. The company claims over 3,000 loans per employee against a 750 industry norm. Margins above 60% are company figures, unaudited. It also claims servicing cost three times below industry, all unaudited. A podcast host claimed $100M revenue and one million loans; Forbes disagrees. Named: Rithm, Newrez and Bayview; Figure live since February 2026. Figure reports 40% better delinquency outcomes in its own A/B test. ServiceMac is reported leaving MSP for Valon; neither company confirmed.

Sources:

What made it hard

Credit bureaus demanded 50 to 100 loans before Valon could report. Valon serviced friends’ loans in small-loan-exemption states to start. Agencies usually want 24 months of profitable history, the host notes. New York licensed Valon only in 2022; three staff ran 13 state exams in 2021. Each client’s data, documents and logic must map to one schema. Its largest 2023 month boarded 80,000 loans, 19.5M data values, 7.6M images. Peak call volume ran two to three times higher than ever before. Du says the founders saw death ahead in the 2022 VC winter. It answered with float income, cross-sold loans, insurance and a tax-dispute pilot. ICE shipped an MSP interface in February 2026. It claims escrow automation cuts manual touchpoints by up to 87%. AI voice and chat agents entered beta in March; Wells Fargo renewed in September. Ginnie scope gaps keep Carrington’s own loans on Sagent about 12 months. 139 BBB complaints closed in three years; no public enforcement action found. Seventy percent of leaders were homegrown before the apprenticeship broke. New hires leaned on AI before learning. New non-engineering hires lose access until a manager attests they spot its errors. Operating as a servicer created channel conflict with software buyers. Wang says the only holders above 10% are himself and venture investors.

Sources:

The strategy

Operate the regulated service on a greenfield core; feed failures into product. ValonOS packages the record, workflows and task management. Productize: LLM agents propose, deterministic code and validators decide. Token spend rose from $300K to $3M, period unstated. An operator reviews the payment agent’s moves. Decagon agents deflect over half of inbound voice calls. Sell the core: Figure live, Rithm’s whole-Newrez migration about two years. Divest the proof: Carrington bought the servicer and adopts ValonOS. Live today: the 810,000 former Valon loans plus Figure’s book. First whole-shop conversions came off an in-house core and Sagent, not MSP. Contracted, not migrated: Carrington’s 998,000 loans ($211B) and Newrez’s 4 million. If both land, about 6 million loans sit on ValonOS against 36 million on MSP. New lock-in risk is recorded: Rithm flags exit restrictions and switching costs.

Sources:

Milestones

  • by February 2021: Fannie Mae approval, first new servicer on a new proprietary system.
  • November 3, 2021: Series B at about a $590 million valuation.
  • December 2024: Ginnie Mae issuer approval.
  • October 2024: $100 million Series C at a $1.1 billion valuation.
  • January 2026: Newrez migration agreement reached.
  • August 4, 2026: Carrington completes servicer acquisition.
  • August 2026: About 810K former Valon loans run on ValonOS.
  • February 2026: Figure live on ValonOS, reports own A/B result.
  • expected 2027: Carrington’s 998,000-loan book under contract.
  • from 2027: Newrez 4 million-plus homeowner book under contract.

Sources:

What others can copy

Run the operation first; your own P&L becomes the demo and the benchmark. Enter through a slice: a subservicing share needs no core switch by the buyer. Raise from the people who own the volume; watch how fast that share falls. Remove channel conflict before going horizontal; test pipeline after divestiture. Price on measured savings over long contracts; check savings per loan monthly. Hit the weak flank first: in-house and end-of-life cores, not MSP shops. These are founder tests to run, not results already achieved.

Sources:

Open questions

Whether a confirmed MSP shop finishes a move; ServiceMac is unconfirmed. Can ValonOS run Ginnie Mae servicing at Carrington’s scale by 2027. Can Newrez move 4 million-plus homeowners without harm while systems run concurrently. How much of the margin came from software versus float and cross-sell. What Valon earns as software only; Forbes’ $86 million predates the sale. Whether neutrality holds while Rithm is investor and largest customer. Whether contractual restrictions now lock customers in, as Rithm flags.

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Limits

Contracted and live milestones keep their recorded scope, dates and qualifications. Rithm’s dual role as investor and customer is a recorded conflict, not a conclusion. ACV, valuation and efficiency figures conflict or lack audit. The 810,000 loans are former Valon loans now on ValonOS, not Carrington’s whole book.

Sources:

Exhibit 8Explore · open a case

Milestones in the Valon case

Exact-day events on a UTC timeline, one lane per case.

  • milestone

How to readEach dot is a dated milestone. Only exact dates draw dots.

NoteMonth- and year-only milestones stay in the tables, never plotted.

SourceLegacy Software Atlas. Frozen scoring snapshot of 5 October 2026. Report version 4 dated 9 October 2026.

Recorded milestones

Every recorded event for this case, in frozen order. Statuses stay as recorded.

MilestoneDateStatusSources
Fannie Mae approval, first new servicer on a new proprietary systemby February 2021reportedAndreessen Horowitz (Angela Strange), "Investing in Valon: Mortgage servicing that actually offers good service," Feb 2, 2021., HousingWire (Alex Roha), "Digital servicer Valon snaps up $50M in Series A round," Feb 2, 2021.
Series B at about a $590 million valuationNovember 3, 2021reportedBloomberg, via WealthManagement.com, "Starwood Backs Mortgage Startup Valon at $590 Million Valuation," Nov 3, 2021.
Ginnie Mae issuer approvalDecember 2024reportedNational Mortgage News (Spencer Lee), "Ginnie Mae issuer approval granted to subservicer Valon," Dec 3, 2024.
$100 million Series C at a $1.1 billion valuationOctober 2024reportedValon blog (Andrew Wang), "Valon Announces Series C Capital Raise," Oct 22, 2024., HousingWire (Kennedy Edgerton), "Mortgage servicing startup Valon raises $100M in Series C funding round," Oct 24, 2024.
Newrez migration agreement reachedJanuary 2026contractedAI-Native Platform to Advance Newrez Servicing Capabilities | Newrez, Rithm Capital, Form 10-K for FY2025, SEC EDGAR, filed Feb 2026., The Mortgage Scoop (James Kleimann), "NewRez Ditches Its Legacy Servicing System for Valon," Feb 2, 2026.
Carrington completes servicer acquisitionAugust 4, 2026reportedHousingWire (Sarah Wolak), "Carrington completes acquisition of Valon Mortgage," Aug 4, 2026., Carrington and Valon press release (Business Wire, via Yahoo Finance), "Carrington Completes Acquisition of Valon Mortgage and Will Adopt ValonOS as Its Core Servicing Platform," Aug 4, 2026.
About 810K former Valon loans run on ValonOSAugust 2026liveHousingWire (Sarah Wolak), "Carrington completes acquisition of Valon Mortgage," Aug 4, 2026., Carrington and Valon press release (Business Wire, via Yahoo Finance), "Carrington Completes Acquisition of Valon Mortgage and Will Adopt ValonOS as Its Core Servicing Platform," Aug 4, 2026.
Figure live on ValonOS, reports own A/B resultFebruary 2026liveValon blog (Michael Tannenbaum of Figure and Andrew Wang), "AI x Blockchain in Mortgage Fuels Outcomes, not Buzzwords," Feb 4, 2026.
Carrington’s 998,000-loan book under contractexpected 2027contractedHousingWire (Sarah Wolak), "Carrington to acquire Valon Mortgage, add 800K loans to servicing," May 7, 2026., National Mortgage News (Spencer Lee), "How Valon and Carrington plan to crack a servicing tech duopoly," June 3, 2026.
Newrez 4 million-plus homeowner book under contractfrom 2027contractedAI-Native Platform to Advance Newrez Servicing Capabilities | Newrez, Rithm Capital, Form 10-K for FY2025, SEC EDGAR, filed Feb 2026.

Back to the cases chapter and the full milestone table.