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Stories about non-QM products. Coverage of subprime, Alt-A and
hard money lending. Home-equity loans and home-equity lines of credit.


Home Equity Lending Trends

HELOC volume up 21% from 2013

Oct. 21, 2014

By Mortgage Daily staff

Investor interest in revolving home-equity lines is growing as compliance burdens on closed-end home-equity products increase. One servicing system is being touted as a single solution for all types of home-equity and first lien products.

From Jan. 1 through July 31, the amount of new credit for home-equity lines of credit worked out to $65.9 billion.

That was more than any other year during the last six years. It was also 21 percent better than a year earlier.

The numbers were outlined in the National Consumer Credit Trends Report from Equifax released at the Mortgage Bankers Association's annual conference.

A separate report from Black Knight Financial Services said that overall home-equity loan volume has reached a five-year high.

Based on loan count, Equifax said 670,000 new HELOCs have been established so far this year, a six-year high and a 16 percent increase from 2013.

The increase reflects growing equity in properties and a shift by lenders from closed-end home-equity loans to HELOCs, Equifax Chief Economist Amy Crews Cutts explained in the announcement.

"Home-equity installment loans require a higher compliance burden on lenders and for consumers home-equity lines of credit offer tremendous advantages in terms of when they draw the loan money and how the payments are structured," Cutts said. "More and more lenders are offering amortizing HELOCs in addition to their HELOCs with an interest-only term."

Cutts noted that although HELOC originations were up, volume stood at just a third of its pre-crisis level.

There were 10.2 million HELOCs outstanding as of September -- the fewest in a decade. The dollar balance, $477.7 billion, was down 4 percent from a year earlier to a five-year low.

Thirty-day delinquency on HELOCs was 2.4 percent last month. Equifax said that was a 10.2 percent decrease from September 2013.

The balance of 90-day delinquent HELOCs was down 14 percent from the year-earlier period.

Outstanding HELs fell 8 percent from September 2013 to $125.4 billion as of last month. Loan count fell 7 percent to 3.7 million.

Seriously delinquent on HELs outstanding diminished by 31 percent in September from a year prior, while HELs in foreclosure dropped 14 percent.

Black Knight noted that its MSP servicing system accommodates HELs, HELOCs and first mortgages all on a single platform. By consolidating servicing platforms, portfolio transparency increases -- improving customer relationships and risk identification.

In addition, Black Knight claims the single-platform strategy helps servicers respond to frequent and complex regulatory changes and requirements.

"As HELOC volume continues to increase, servicers have more reason to look for a single platform that will support the needs of both first and second mortgages," Black Knight Chief Information Officer Joe Nackashi said in the announcement. "Black Knight’s MSP system has the flexibility, strength and stability to accomplish that."

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