Targeted growth in home equity lending for a community lender can be a daunting task. The “big banks” dominate as they control roughly half of that market. If a community lender isn’t actively marketing home equity loans and lines of credit offerings, they are giving up potential market share to a handful of banking giants.
Projections reveal that closed-end home equity loans and HELOC’s are primed for further growth in 2020. How can a local community lender position themselves to thrive in this growing market?
A multitude of factors can determine the success of a home equity promotion. Before the marketing plan can be organized and prior to understanding where customers are learning about home equity loan options, a community lender must mitigate the risk factors associated with the expected growth in this lending area.
Some lenders have taken a unique approach to the way they protect the strength of home equity lending growth by focusing on strong equity default protection, along with the elimination of costly administrative work. Not only is risk management involved in this growth platform, but loan operations must be in the discussion with the expected increased loan volume. It can be difficult to balance the two aspects.
Being backed back a strong equity default program might be the jumpstart that the risk management team needs. The Equity Default Program from Unitas Financial Services has the structure to widen the loan eligibility spectrum, but still, maintain robust protection against default. This program allows for expanded lending without increasing risk. With the support of the Equity Default Program, lenders can safely broaden their LTV threshold, reach more borrowers, and significantly grow their bottom line. In the event of default, the lender can file a claim, avoiding the foreclosure process, while also having the ability to report zero losses on their balance sheet.
Read our blog post: Tap Into Higher LTV’s on HELOC's with Equity Default Protection
With this growth in home equity lending comes an increased administrative workload within lending operations. One way to improve efficiency in loan operations is to eliminate any insurance tracking work within the policies and procedures. Blanket Mortgage insurance programs are specifically designed to protect the community lender from uninsured losses while improving efficiencies within the loan operations. You can insulate your new home equity customers and your institution from future disruptions by eliminating the need for outreach on homeowner’s insurance updates.
Read more: How Lenders can use HELOC's to Improve Customer Relationships
A community lender has many factors to consider when contemplating targeted growth in home equity lending. From the marketing team, to risk management, to loan operations, there are varying opinions on how to undertake this type of growth strategy. Robust protection against default on these new loans and a reduction of FTE expenses in loan operations are two clear areas to focus on when organizing the next steps in such a promotion. With the programs offered by a strategic partner like Unitas Financial Services, community lenders can gain some market share from the “big banks” in the competitive landscape of home equity lending.
