- 2 days ago
Home equity has re-emerged as one of the most active and strategically important segments of today’s mortgage market — serving as both a growth channel and a signal of evolving risk. Its impact extends beyond second liens, influencing borrower behavior, valuation strategy, and operational efficiency across first mortgage portfolios as well.
In this data-driven session, industry experts and market analysts will explore how home equity trends are shaping lending decisions across the industry. We’ll look at what the latest data reveals about borrower behavior, portfolio risk, and the operational strategies lenders are adopting in response.
Designed for lenders, brokers, risk leaders, and valuation professionals, this session focuses on practical insights and actionable strategies — grounded in real market dynamics rather than sales pitches.
In this data-driven session, industry experts and market analysts will explore how home equity trends are shaping lending decisions across the industry. We’ll look at what the latest data reveals about borrower behavior, portfolio risk, and the operational strategies lenders are adopting in response.
Designed for lenders, brokers, risk leaders, and valuation professionals, this session focuses on practical insights and actionable strategies — grounded in real market dynamics rather than sales pitches.
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LearningTranscript
00:00:02Welcome, everyone. We have an exciting webinar today, the State of Home Equity, a Strategic
00:00:10Indicator for Risk, Growth, and Performance in Today's Mortgage Market. I'm Alison LaForge,
00:00:17the Managing Editor of HousingWire's Content Studio, and today's webinar is produced in
00:00:21partnership with Accurate Group. Now, a few housekeeping items before I turn things over
00:00:27to Josh, who will be leading today's conversation. At the top of your screen, you're going to see an
00:00:33option for chat, ask a question, resources, and even emoji reactions at the bottom of your screen.
00:00:39This is meant to be an interactive conversation, so if you have any questions for our panelists today,
00:00:45submit them using the chat or using the ask a question option. We will be keeping an eye on both
00:00:52for the entire webinar. We'll get through as many questions as we can at the end of today's session.
00:00:59Today's session is being recorded, so if there's anything that you want to send over to anyone on
00:01:04your team or in your office or share the recording, you will be able to do so. Now, today we
00:01:10are joined
00:01:11by industry experts who will be leading us through this conversation, delving into how home equity
00:01:18trends are shaping lending decisions across the industry. Let's start with Steve Bukowski,
00:01:25who is the COO of Accurate Group. We are also joined by Ken Flaherty, the Director of Retail Lending
00:01:32at Curanos. And as I mentioned, leading today's conversation is Josh Livingston, the CRO of Accurate
00:01:41Group, who will be moderating today's conversation. Now, Josh, I'm going to turn things over to you.
00:01:48Thank you, Allison. Appreciate it. Ken, Steve, thank you for joining. Ken, especially as our
00:01:54special guest, providing great insight and data into the industry. Accurate Group, if you're not
00:02:02familiar, we are a leading national provider of title and valuation services across equity, mortgage,
00:02:11and default, leading with technology and innovative products. And our special guest, Ken, who joined us,
00:02:18is from Curanos. Ken, you want to give an insight into Curanos and where you get all your wonderful data?
00:02:25Yeah, absolutely. And thank you to you and Steve and Accurate Group and HousingWire for having me and
00:02:31having Curanos represented here. But for those not familiar with Curanos, so we're a data provider for
00:02:39lenders across the country where we have a benchmark of lenders that contribute their data on a weekly
00:02:47basis on originations, monthly on home equity portfolio that we aggregate together for a near
00:02:53real-time snapshot of what's happening across the market. So across the page there, you see we dive into
00:02:59many different verticals of named lender pricing data to the origination and the portfolio benchmarks.
00:03:05But really just want to emphasize here, all the data or most of the data that you're going to see
00:03:10here today is directly from our origination and portfolio benchmarks that's going to bring today's
00:03:15conversation to life. And this is exactly how we work with our benchmark of lenders across mortgage,
00:03:23home equity, unsecured, small business, and really trying to create those actionable insights
00:03:29to provide information to be able to make strategic decisions with. So you're going to see a lot of great
00:03:34data here today, all of which is available in our benchmark. Thank you, Ken. So today we're going
00:03:42to look at just kind of the market overview, kind of utilizing Curanos' data set to give some insights
00:03:48to what lenders are experiencing. Steve's going to talk around some operational efficiency and risk
00:03:57assessment. And then we'll kind of wrap it up with strategic outlook as well as questions at the end
00:04:03to based on what the audience would like to hear. So diving into the market overview, it's been an
00:04:12interesting year, right? The one great thing about the mortgage industry is things are always changing
00:04:17and things that even outside of our control, um, have impact to our world. Uh, you know, we saw a
00:04:26lot of hope
00:04:26early on January, February with rates starting to go down and create activity, especially in the refinance
00:04:34market based off of the last few years, higher rates. Um, but we saw geopolitical changes. Uh, today's inflation
00:04:43data. I'm sure everyone's super excited to see, uh, 3.3%, um, highest in three years that has impact across
00:04:51the board. Um, based on that though, you know, Ken, we're kind of seeing, you know, equity continue to
00:05:01lead the pack and continuing to see it be really a significant tool within most lenders for not only those
00:05:11staying in place for home improvements, but with costs of goods and everything going up, uh, we're
00:05:16seeing a lot more debt consolidation. Um, where do you see kind of, I mean, are you aligned with that
00:05:23with just where rates are at and, you know, where do you see kind of things start to impact with
00:05:28rate
00:05:29changes where equity and maybe cash out refinance become more of a balance versus being more equity
00:05:37dominated? Yeah. So I, I really see home equity having a pretty sizable runway ahead, uh, for a
00:05:47number of different reasons, but to really kind of think about what are the, what will be the main
00:05:53drivers that will continue to propel the home equity market and the demand for home equity.
00:05:58To me, I think really boiled down to three main reasons. Number one, as shown on the chart here on
00:06:04the left hand side, uh, we still have the vast majority of existing first mortgage holders sitting
00:06:12at fantastic interest rates. Uh, you know, in totality, we've, we're still nearly 50% of borrowers
00:06:20that are sitting at that four and a half percent rate or less. Um, sorry, first mortgage folks,
00:06:26I don't see rates getting down to that point anytime soon where it's going to make sense to touch that
00:06:30first. So I think you still have a glut of locked in first mortgage borrowers. Um, secondarily consumers
00:06:37are continuing to pile on the debt and that is a real opportunity for improved cashflow. Um, um,
00:06:46you know, credit card rates for the last five years, uh, have increased, I'm sorry, credit card balances
00:06:52have increased, uh, over 22%. Um, I mean, you're, you're talking sizable dollars per household at
00:06:59average interest rates of over 25%. So your borrowers, your consumers need help. And, and home equity is
00:07:06a fantastic tool given, um, uh, which brings me to the third is your, your homeowners, your consumers
00:07:12are sitting on a ton of equity and what we're seeing pockets of, uh, challenged home prices. We're still
00:07:18at elevated levels. So I think it's safe to say that consumers are still sitting on and retaining
00:07:23vast amounts of equity that I think are going to continue to propel the home equity market
00:07:28for the foreseeable future. Thanks Ken. And, you know, on the right side, you show kind of
00:07:35some numbers that have that sort of impact, you know, you laid out HELOC with an IO situation,
00:07:43um, driving it even lower, but even with a HELON at a fixed rate with principally being included,
00:07:51you still need to see rates significantly below 6% to start having real financial impact for best
00:07:58scenario with the borrower, especially in debt consolidation. Is that a fair statement?
00:08:05Yeah, that's how we assess it. And again, I encourage everybody to put their calculators away.
00:08:10You know, this is, this is back of the napkin calculation, but you know, just putting yourself
00:08:16in the shoes of a, a existing homeowner that's sitting at that three and a half percent rate,
00:08:21we're just doing that calculation of when do we think it's going to make sense. So what is that,
00:08:27what is that line in the sand and does it need to get all the way down to four and
00:08:31three eights?
00:08:31No, but I think it needs to be pretty close, uh, for a first mortgage rate term cash out transaction
00:08:38to make the most sense. Um, as everybody knows, and you know, that unfriendly reminder, uh, I don't
00:08:44think we're going to be there really anytime soon. So, uh, I think a lot of those locked in borrowers
00:08:49are
00:08:49going to be continuing to look for, uh, an outlet and home equity can be a fantastic product for that,
00:08:56for whether it is debt consolidation, large purchases, or as home as existing homeowners
00:09:02are staying in their homes for longer and longer because of the affordability challenge,
00:09:07they're going to eventually renovate that kitchen. They're going to eventually do things to make that
00:09:11home, uh, their home, um, if they can't afford that next home or next size up home.
00:09:19Oh, it's great insight. Thanks, Ken. This is, you know, you talked about just the overwhelming
00:09:25amount of equity in homes that we're seeing with home price index growing people again, staying
00:09:32longer principle being paid down. But what's interesting here is you see the breakdown of
00:09:37how people are utilizing that and home equity, obviously with those lower rates that you established
00:09:44earlier are, are dominating, but even within home equity, HELOC is overwhelmingly dominating. What,
00:09:51what do you think is driving that or why HELOC is, is it ease? Is it just how people are
00:09:58processing it
00:09:59or any thoughts there on what drives HELOC to be so much more successful than, uh, HELOans at this moment?
00:10:08I think, um, in most cases, um, borrowers are seeing
00:10:14the benefits of a HELOC in a, dare I say, lower rate environment, but lower from where we were,
00:10:22you know, a year, two years ago. Um, and again, other than current conditions, the perception of a
00:10:30falling rate environment, um, you know, uh, uh, to your earlier point, HELOCs in many cases offer
00:10:39interest only payments. They offer redraw functionality for a lot of depositories,
00:10:44they offer the ability to not have to draw everything at once. Um, so I think there's
00:10:49just a lot of benefits to HELOCs, especially, uh, for borrowers using it for the purposes that
00:10:55we previously described, especially, uh, the debt consolidation, that IO payment, or, you know,
00:11:01not having that fully amortized payment at a locked in rate where home equity loans, you know,
00:11:06really shines. HELOCs are certainly going to provide the, the better alternative there.
00:11:13Absolutely. Steve, from a processing standpoint, we've heard from lending partners that HELOC can
00:11:18be easier just because of some of the regulatory aspects and how they treat them and process them.
00:11:23Any thoughts from your perspective of why you see HELOC, uh, overwhelmingly larger than HELOans?
00:11:30Well, I, I think part of it, you know, what we generally hear is HELOC offers an option
00:11:36for the future, right? With an e-loan, you're getting that funds out dispersed all at one time,
00:11:40and you're making payments on it. With the e-lock, you have it almost like it's a bank account
00:11:46sitting there on standby. So not only can you take out the funds you need for that payment that,
00:11:51you know, Ken reference, but you also can get the future opportunity to take and draw additional
00:11:55funds. So instead of coming back for multiple e-loans and having to reapply, uh, the consumer-friendly
00:12:01aspect of the home equity line of credit is really what drives that high percentage,
00:12:06in my opinion, um, because it gives a future options.
00:12:12Thanks, Steve. Speaking of future options, uh, prognostication is one of my favorite things
00:12:18for Ken to do and look at what he's seeing coming down. Um, looking at first mortgage first,
00:12:25you know, it, everyone was pretty aligned in the, um, 2025 forecast and, and you guys were pretty spot
00:12:35on. Um, from your perspective, 26 though, there's yourself and Fannie's seeing more growth in the
00:12:43mortgage side yet. MBA is, has downgraded down to 6%. Any, any thoughts on that on what drove your
00:12:49decisioning there and why you guys are looking at it from that perspective? Yeah. Um, and I will say
00:12:56the beauty of forecasts is, uh, you can always re forecast. Um, don't worry about the last one,
00:13:03worry about the one that's in front of you. Um, so I certainly see, uh, additional adjustments being
00:13:08made, uh, as time goes on. Um, but you know, as you think about all mortgage transactions right now
00:13:16that we're seeing so far this year and even last year, um, it's between 60 and 65% are made
00:13:24up of,
00:13:24uh, purchase. Um, purchase is really the big lever in the big mover and really will ultimately end up
00:13:33being whether or not we have a big growth year, um, uh, this year in mortgage. But so far this
00:13:39year,
00:13:39your purchase is up very modestly, uh, I want to say between one and 3% right now. Uh, so
00:13:47some of
00:13:48the bigger numbers that you're seeing out there, um, you know, refinance was really from January and
00:13:54February when we saw that lull in rates, uh, all for that to be taken away so quickly. Um, so
00:14:00it really
00:14:00tells us we're really counting on a really, uh, big purchase market, uh, this season. Um, but we've got
00:14:07some headwinds with, uh, home affordability, which we'll talk about. Um, but it certainly tells us,
00:14:13and you saw on that previous page, you know, what if, and when rates do get down closer to that
00:14:18six
00:14:19or even under six, uh, refinance can really, um, you know, uh, offer a lot of opportunities for those
00:14:26borrowers that are still sitting at that upper six, seven, and even eight handle first mortgages.
00:14:32So I think a lot of what you're seeing, especially from Keranos and from Fannie is I think a lot
00:14:38more
00:14:38upside of, we think we'll still have a positive purchase market and purchase growth this year,
00:14:44but a lot of that is going to be founded on as long as we're not going sizably up in,
00:14:49um, uh, in,
00:14:51in rate, we should still be able to see some success out of the refinance market this year.
00:15:00Excellent. Looking at equity though, significant growth in, um, 25. So across the board and a lot
00:15:09of lenders took advantage of that. Uh, then we're looking at a relatively flat 26. Um, but you are
00:15:18seeing some positive growth in the second half for some lenders, um, kind of curious to your thoughts.
00:15:25And then after that, you know, Steve, I'd be curious to your thoughts as well around,
00:15:30you know, us doing a lot of partnering with a lot of various lenders across the country.
00:15:36You know, we saw actually a pretty okay first half of the year, um, with some growth with key
00:15:45clients in certain markets. So I'd curious to your thoughts. So can you first on just, you know,
00:15:50what you're seeing from flat, was it everyone advantage in 25 with all that substantial growth
00:15:55and then rates are what's driving kind of the thought process with, uh, a more flat 26.
00:16:04Yeah. So I, I know not pictured on the page, but if I take you back to, um, the last
00:16:12time the home
00:16:12equity market saw back to back years of double digit growth, uh, was back in 2015 to 2016.
00:16:20So it's been 10 years. Um, so I guess in summary, it is not common for home equity to see
00:16:29multiple
00:16:29years of double digit growth. So I'm taking this as a positive of, um, if we're at zero to 3
00:16:37% for this
00:16:38year, um, that is making some assumptions of where we think we will end this year from an economic
00:16:44standpoint. Um, but we're talking about compounded growth, a, a, a growth year of 16% last year.
00:16:53And if we're upwards of 3%, I'm, I'm still taking that as a win to have two double digit years
00:16:59in the
00:17:00growth cycle. Um, if you're questioning why can you talk so bullishly on home equity on prior slides
00:17:10and then say we might even be flat this year, uh, we really have to take a hard look at
00:17:15the situation
00:17:16that, uh, consumers are sitting in. And if anyone looks at the consumer confidence index or consume
00:17:21consumer sentiment scores, um, folks are not very positive about the outlook of the economy right now.
00:17:28And that if you look at periods where customer sentiment is down related to home lending growth,
00:17:35a combination of mortgage and equity, um, those are down years, those are down periods. So I think
00:17:40a lot of this that we're seeing is that correlation of customers, consumers are not overly positive of
00:17:47what, uh, how the economy is going in their financial situation. Um, so we're, we're, we're betting
00:17:53pretty heavily here that history will continue to repeat itself, that despite all the
00:17:58tailwinds we have going for us, uh, everything we talked about previously, um, customers still make
00:18:04that decision whether or not they finance and pull that trigger or not and use a home equity product.
00:18:09Um, uh, still think they'll use their credit cards and perhaps other outlets, but actually
00:18:14making that leap to dive into a home equity product, uh, I think we're going to be really challenged,
00:18:20uh, if we continue to see a, a lower trajectory or more challenged trajectory from a, uh, customer,
00:18:28customer, consumer outlook type of perspective.
00:18:33So Ken, a follow-up question to that then is, you know, if willingness to spend is still there
00:18:39and, you know, credit card, uh, continues to increase, is there an opportunity for lenders
00:18:45with education or on debt consolidation and value there, um, and presenting it in that manner versus
00:18:53a safety line or home improvements and, and, or buying the new kitchen when they're not confident
00:18:59of what's going on in the economy, but opportunity for lenders to show, you know, at eight percent or
00:19:06nine percent home equity loan is a heck of a lot better than a 22 percent credit card bill that
00:19:12you've
00:19:12been carrying over. Yeah. Well, 1,000 percent. I'm so big on, um, the more you can educate your
00:19:20customer, um, you know, the happier customer that you're going to have and, um, the likelihood for
00:19:26repeat business down the road. At the end of the day, um, you know, we can talk all day long
00:19:32because we
00:19:32live and breathe this every day. Uh, both of you guys know this. We are not your average, uh, consumer,
00:19:39uh,
00:19:39or, or quite strange ourself. Uh, we live and breathe this stuff. But my point is, um, your
00:19:45average homeowner, your average consumer is not this educated. They know they have a need. They
00:19:51know they are financially challenged. Most do not know what is that right product to be able to
00:19:57fulfill that. They've heard of a home equity. Most people don't know what it's actually capable of or
00:20:02what you can use a home equity product for. So we think more we can educate borrowers on the uses
00:20:08and the functions and the features can help connect those dots to challenges with opportunity through
00:20:14our products. Um, it can certainly make a lot of headway, um, for continued growth in this market.
00:20:24Thanks, Ken. Steve, any thoughts on, you know, we've, we've experienced some growth, um, with
00:20:31clients volumes going up and things like that. Do you have any thoughts on that? Is it, is it
00:20:37limited region? Is it strategy or what are you seeing that's driving some success for some
00:20:44lenders while others may be a little more flat this year? Well, and you know, one thing I like
00:20:50to say on that in terms of some lenders being flat and even the projection looking at 2026 your home
00:20:55equity, you know, 3%, which is the high end of the range, you know, home equity is still dealing
00:21:00from a position of strength. You know, that's 16% 2025 growth following a prior year of double
00:21:06digital growth has really had many of our lenders or our customers, their capacity at some point,
00:21:132025 started to hit a, hit a tier, right there. They moved individuals out of refinance because
00:21:18refinance volume was slow. They're processing consumer loans, home equity loans, et cetera.
00:21:23They did not have in order to do, they have this year, a need to really heavily market home equity
00:21:27like you've seen in the past. That comes right down to what Ken was saying about education.
00:21:31In years past, you would absolutely see lenders doing heavy marketing in spring and fall for home
00:21:37equity and to trying to drive applications through that process. There's been so much organic growth and
00:21:44need just from all the items Ken mentioned before that home equity for our lenders has already been
00:21:50strong and has continued to be strong in first quarter and second quarter of 2026 because they haven't
00:21:56really had the need to go out and market for it. Some lenders are starting to pick up market.
00:22:01They're doing more marketing towards internal portfolios, identifying individuals that already have
00:22:06a first mortgage on the books so they don't want to lose them to somebody else who's coming in and
00:22:10trying to, you know, target that home equity market. But really it's just been, we've been so fortunate
00:22:16on the home equity consumer side that the demand has been there because of the rates and all the other
00:22:21things Ken mentioned that lenders haven't heavily marketed this product. Some have, and those are the ones
00:22:26you've seen some growth out of.
00:22:29Thanks, Steve. Real quick though, in the spirit of interactive conversations, we did have two
00:22:36questions come up. Ken, you may have better insight to this one. Question from George is,
00:22:45is it safe to assume that most cash-out HELOC transactions are adjustable rates?
00:22:54I don't know if you have that insight.
00:22:57Hard to answer that question without being overly factual, but yes, I think it's absolutely two parts.
00:23:09Won't have you back up, Josh, but on one of the previous slides, we talked about
00:23:13the percentage of existing first mortgage borrowers that have over a six percent first mortgage rate.
00:23:22That population is getting bigger. It's actually bigger than the population of borrowers that hold
00:23:27a three percent or less first mortgage. So the longer we're in this higher rate environment,
00:23:33the larger that bucket's going to be and the smaller the other buckets become.
00:23:37So I think it's a good portion of those arms that we're now hitting that five-year. Five-year arms
00:23:45were
00:23:46very popular, and certainly as rates got higher over the last couple of years, rates are now
00:23:55increasingly popular. So I would say it's a portion, but I think it is much more in those borrowers that
00:24:01probably either bought their home or even did a refinance in those upper rate tranches that are
00:24:08likely kind of the bigger users of that refinance product right now. Thanks. And when you're looking
00:24:16at your forecasting, Jimmy wanted to know, does property types such as a condominium have any impact
00:24:24on the forecast? Is there anything that carve out from that perspective? Not specifically on condominiums.
00:24:33Our forecast is made up of about 25 different market correlators. There's some that have heavier
00:24:40weighting than others, but specifically condominiums or property types is not a factor, but certainly
00:24:48homeownership and homeownership rates play a very large role in those correlations.
00:24:56Thanks, Ken. All right. Looking at affordability and ownership rates across things, you know,
00:25:06we talked about certain markets being stronger than others. You know, where do you see from the impact
00:25:13of this? All right. You're talking about Florida in the slide showing Florida and California trending down
00:25:19year over year. Where do you think this has for an impact? Well, I think a couple of things. So
00:25:32I think
00:25:32when you look at this map and what we're looking at is the origination growth year to date this year
00:25:38versus the same period of last year with some correlations that you can take away here. Well, it's
00:25:44not an exact science, but where you see more commonly of home equity originations falling are some of the
00:25:52markets that tend to historically and even as of recent have become more overheated. You know, particular,
00:26:01you know, a lot of West Coast is, you know, we know the story in California. So I think a
00:26:07lot of
00:26:07values were overinflated there. Now it's becoming more challenging, you know, as values are still
00:26:15higher, but we're certainly losing a lot of ground in certain pockets like San Francisco and similar
00:26:22areas where homeownership is just too challenged. Despite some of the droppage in real estate values,
00:26:32the values are still super inflated. Going back to the forecast discussion, again, one of those
00:26:40correlators, as I mentioned, is homeownership and homeownership affordability. So as you think about
00:26:47median income levels versus median home prices, if consumers are not filling homes and improving or at
00:26:57maintaining those homeownership rates, we see that as a direct correlation of when home equity is
00:27:03successful or where it's going to meet some headwinds. So again, pockets like California,
00:27:08Nevada, Louisiana has other challenges, but certainly Florida all fall within those categories
00:27:14of more challenged real estate values, more challenged home affordability challenges that I think are going to
00:27:21continue to continue to cause some challenges. I wouldn't say complete blockages, but just
00:27:27more challenges for home equity growth to continue to sustain there.
00:27:33So lenders should be aware of that and planning accordingly that there could be challenges
00:27:38coming in states if affordability continues to be a challenge.
00:27:46Yeah. Ken, on this slide, you know, you talk, you demonstrate purchase volume versus refinance cash
00:27:53out. How do you think this has impact or in the importance of tracking this from a risk standpoint
00:28:02and planning standpoint? Well, I think it perfectly summarizes what we've been talking to up until this
00:28:09point is, you know, left hand side. It is green across the map, some super high, some kind of median
00:28:18levels,
00:28:18but we're seeing positive refinance cash out transaction total volume up year over year across all the states.
00:28:27On the right hand side, again, kind of goes to that homeownership rate, you know, purchase volume.
00:28:34And again, you see those same correlations just like we talked about on the home equity growth slide.
00:28:39Some of those same markets were seeing purchase volume down.
00:28:44And again, I think it really all comes back to the challenge of
00:28:49homeowner affordability, given the rise in payrolls is not meeting the same growth rate as the rise in
00:28:58home values. So those median income levels are seeing slight growth, certainly not keeping pace with
00:29:07those median home prices. And it's putting more and more potential suitors, potential homeowners
00:29:13out of that bubble of being able to purchase that next home up, you know, for a growing family or
00:29:19for
00:29:20first-time home buyers.
00:29:24On affordability, can you kind of show
00:29:26this and it's pretty significant showing, you know, from 2020, which is obviously a lot of different
00:29:35conditions at that time with rates and just conditions within due to the pandemic starting.
00:29:43But now we've seen a significant drop off 24 and 26 of affordability. So that all ties in
00:29:52across the board, right? You do call out though, you know, most expensive time to purchase home was 81
00:30:03in 2006. You did reference 81 there with the interest rates, but I will point out that a house
00:30:10cost like $40,000 at that time. So I think people would probably pay 18% to get a $40
00:30:15,000
00:30:15house they could live in at this moment.
00:30:20Yeah, the, you know, I'm not sure who in the audience here ever looks at this,
00:30:26but I think this is a fascinating statistic and a really good way to keep your finger on the pulse.
00:30:32Because all of this data is free, by the way. This is not Cureness data. This is out on the
00:30:38Federal
00:30:38Reserve Bank of Atlanta site on homeownership affordability monitor. And it breaks it down by
00:30:44specific CBSAs or states. But if you just look at things on a national level, it's pretty
00:30:49compelling of the lower you are on that scale, it is a less affordable market. So as we look at
00:30:55things
00:30:55nationally, you know, we were headed for a pretty nice trajectory through 2020. And we all know what
00:31:03happened then. And now we're sitting at really challenged levels of dollars not going as far. And, you
00:31:10know, to your point earlier, yeah, 18% rates for $40,000, that creates its own set of challenges.
00:31:18But you're talking average home prices sizably above that, you know, at rates that people in the 80s
00:31:25would kill for, you know, 6%, 7%. That compounding factor just becomes more and more of an issue for
00:31:34borrowers to get into new homes.
00:31:40Thanks, Ken.
00:31:43I think I'm delayed there. Sorry. And this kind of just shows this is a good indicator around
00:31:51what you're talking about with median income levels and the ratio, right, 2015 to 25, as we see
00:31:58more areas growing really too with some areas, you know, being that 7-8 index. And that, I think this
00:32:09is just a good understanding for individuals in the market where it does have, there are pockets where
00:32:17affordability is going to continue to be a challenge.
00:32:20And we joked earlier that no one yet has really shared any true idea of how to get
00:32:27things more affordable other than rates going down, which is out of our control at this moment.
00:32:34Yeah. And real quick, Josh, on that slide, I think this visual, while it's not the same calculation as
00:32:43the homeownership affordability monitor, it's very, very close. But this gives you that more
00:32:49magnified view of where we were 10 years ago, where we are right now. And again,
00:32:55not to beat a dead horse with this, but we're talking about the same challenges in the same
00:32:59markets where you're 7-8X or even over that of these are the pockets where purchase is down.
00:33:07This is the same pockets where we're seeing home equity down. And certainly in the central,
00:33:11we're seeing more positive growth out of purchase, refi, and home equity. You're certainly
00:33:17seeing more in that 3 to 4 percent range, or 3 to 4X range, rather.
00:33:28So, it's interesting when we look at this slide is interesting to me because, so you're,
00:33:34we're showing application volume growth in perspective to dollars
00:33:43being lower than actually booked volume growth. I just kind of wanted your insight to that.
00:33:50You know, where we see, again, HELOC demand is softened, but HELOC is growing, which we've talked
00:33:59about earlier. But why are we seeing lower application and higher booked amounts? Is it a better
00:34:08credit environment for many lender or for many borrowers? Is it just due to the growth and the
00:34:14available equity across the board? Or what is the thoughts there?
00:34:19I think you have a couple things happening here. You know, if we just pay attention to the totals for
00:34:26a moment, again, down in applications, up in originations for that gray bar there.
00:34:32What you have to remember is, number one, the Q1 of 2025 felt like we were all shot out of
00:34:42the cannon.
00:34:43We were just on the heels of the Fed finally cutting rates after what felt like forever,
00:34:49in Q4 of 24. And so, we saw what we felt was a lot of pent up demand. So, a
00:34:56lot of that really
00:34:57propelled into Q1. In fact, Q1 of 2025 was the best performing Q1 that our data goes back 20 years.
00:35:06We can't find a quarter that's a better performing Q1 out of that entire period.
00:35:10So, it felt like a lot of pent up demand. So, you're comparing a really big Q1 of last year
00:35:16in terms of applications. From a booking standpoint, what you also have to think about is,
00:35:22and I think we'll get to a handful of these views, but cycle times still are averaging
00:35:3030, 40 plus days. So, a lot of the applications that we took at the end of 2025 rolled forward
00:35:39into
00:35:41January and February of 2026. So, I think we're reaping the benefits, but if we were to look at this
00:35:49on a monthly basis on the velocity of applications versus the velocity of booking growth,
00:35:55and not comparing versus last year, we would tell a slightly different story where we are actually
00:36:01doing pretty good on application volumes month over month. We're just comparing to a really big number
00:36:07last year. Bookings, it's just a slowing effect of now all those applications that we really just
00:36:14started to get, you know, March, April timeframe, just haven't fully seasoned out yet for that booking
00:36:22number to actually show its true colors there. So, I still think as our data unfolds and as the market
00:36:29unfolds, and certainly as lenders pipeline season out with cycle times, I think the scales will start
00:36:36to shift a little bit, but hopefully that provides some insights and while we're seeing some mismatches
00:36:41there. Thanks, Ken. That's a good segue into the next area around operational efficiency. This is such
00:36:51a key component and where we see lenders having more success in certain areas than others. You know,
00:36:59and, you know, Steve, from, you know, your perspective, right? We've talked about home equity
00:37:04being probably shining light right now out there. It's key for lender growth in 26. It's, in some cases,
00:37:13key for financial, you know, education within borrowers. You know, how should lenders be thinking
00:37:21about operational efficiency and the impact, right? Speed, efficiency of risk management,
00:37:27performance optimization, how does that all play in? Yeah, and it all comes out the other end is
00:37:34capture rate, right? So, you know, we have some great conversations about lenders and how they're bringing
00:37:39in volume and how they're getting applications, but really it's about how you execute and it's how you
00:37:46end up closing those loans at the end of the day. So, the more equity lines, the more streamlined equity
00:37:51lenders have a really great process where they maximize the balance between speed, efficiency,
00:37:57and risk to the entity, right? So, you know, we've talked about, Ken, we'll show a little bit later,
00:38:02you know, the cycle times to close, but really good lenders in the home equity space that are working
00:38:07with really good partners. I really focus on products that leverage all those components,
00:38:13right? They have solid risk profiles, whether it's distribution, geographic risk,
00:38:18refinances versus loans versus ELOX, or just fraud type risk, you know, making sure you don't have
00:38:24losses and you're providing good products both on the valuation on the title side that allow that lender
00:38:29to know they have a very secure position and can move forward quickly. They don't have to,
00:38:34you know, move quickly at the expense of quality. Speed is important, but I think some individuals
00:38:40or some groups tend to overvalue speed on the front end and don't look at the entire process.
00:38:45And what I mean about that is there's some really great tools on the front end, both on the valuation
00:38:50side and the title side to help lenders make very quick decisions. But sometimes those tools
00:38:56overcompensate speed and they result in items that down the line in the back end of the process
00:39:01cost delays, which is how you get those 40-day cycle times on close. Title decisioning,
00:39:07evaluation decisioning, that can all be done very, very quickly at a very high quality rate.
00:39:12But when you get to the closing and the convenience of a mobile closing, for example,
00:39:16which we'll talk about in a little bit and RON closings, those are things that get overlooked
00:39:21because everybody's focused on the initial two products that drive that lending decision. And of course,
00:39:27in conjunction with credit and risk, payback risk and things on those lines. So working with vendors
00:39:33and having a strong process where vendors and the lenders work together to have a streamlined process
00:39:38that delivers all those components, you know, convenience, cost and speed, as well as quality
00:39:43is key to a successful home equity lending process.
00:39:48That sort of leads us into kind of borrower expectations, right? We're in a
00:39:52like we have to be honest with the expectations, right? Amazon world of next day delivery or same
00:39:59day delivery. How do you look at borrower expectations or how should lenders be looking
00:40:05really at borrower expectations to ensure that they do continue to capture and not have any sort of
00:40:12bleed to competitors? Yeah, today is an on-demand world, right? Borrowers want convenience,
00:40:18they want things to move fast, and they don't want to have distractions or last-minute complications
00:40:26that complicate the process and diminish their experience. You know, in this particular slide,
00:40:31you can see, you know, there are automated decisions. Lenders want to know, or borrowers want
00:40:34to know they're approved quickly. It's a digital world. Most applicants now come in online or through
00:40:39a digital medium. There are still branch applications. Some larger lenders have good branch portfolios and
00:40:45good branch sale forces can drive a lot of applications through their branches. But for the
00:40:50most part, it's digital. But that borrower, you know, once they get that application, they're happy. You
00:40:56get good scores, your P's, you get good reference scores, net promoter scores, etc. But if that automated
00:41:02data ends up causing an issue at the back end that adds weeks to a process, for example, not identifying
00:41:08a trust through a bad title search or providing an AVM value that's high or low without a conditional
00:41:14review like a PCR, property condition report, those actually are more detrimental to the borrower
00:41:20consumer and experience and draw that cycle time out longer than if you had just spent 24 hours and
00:41:27got a title report that you can depend on 100% of the time and address all issues. So really,
00:41:32the product mix
00:41:34needs to be, once again, balanced, but high quality, low borrower impact that's going to give them a
00:41:39very quick overall closing experience in a very friendly way.
00:41:46And it's our job on the back end to make that happen without the borrower even knowing it's happened.
00:41:53So for lending partners out there, what should they be looking at for strategy and tools out there?
00:41:58And we got to talk a little bit, be conscious of time, because we can go down a rabbit hole,
00:42:03but
00:42:03AI and what's actually happening out in the market.
00:42:07Very quickly, so both on the title side and the appraisal side, really for the home equity space
00:42:12in particular, when you're lending under the de minimis level, you want to use the products
00:42:17that are very beneficial and quick to the home equity environment. I mentioned AVMs, automated valuation
00:42:22models, but there's also hybrid appraisals. They have a home inspector combined with an
00:42:28actual USPAP compliant appraisal. Many of those reports can be done very quickly.
00:42:33You have an appraiser providing an appraised value, just like USPAP, like in DENO4,
00:42:37but that inspector takes away some of the work product or the timeframe that tends to clog appraisers
00:42:43up. And everybody on this call, I'm sure is aware of the fact that the appraisers are an aging
00:42:47platform. We're getting ready to move to 3.6 UAD at the end of the year. So there's a very
00:42:54limited
00:42:54supply of appraisers. So inspectors and hybrid products could be a force multiplier that'll help
00:42:59speed things up for your borrowers, especially in times where volume starts to increase.
00:43:05On the title side, it's a very similar thing. You know, getting a high quality title product for
00:43:10home equity link current owner search that identifies all the potential risks up front or the lack of risk
00:43:16within 24 hours is key. It doesn't pay to have a product that's delivered in 10 seconds that ends
00:43:24up having a 10% error rate and causes borrower issues on the back end, either overreporting or
00:43:29underreporting. When 24 hours, you can have 100% solution that eliminates future borrower impact items.
00:43:36So it's really using your products and balancing them correctly to make sure you have a streamlined
00:43:42process. Once again, that's a low impact. And I would say the biggest thing I see today that
00:43:47many of our customers are moving to is starting to take the signings out of the branch network where
00:43:53individuals face it. You know, working individuals don't want to be inconvenienced by having to go to
00:43:59a branch to sign Monday through Friday or Monday through Saturday, nine to five. That's when they're
00:44:04working. They're busy. They don't have the time to do so. They want either a signing that comes to them
00:44:09via mobile or a RON signing that's very convenient and it's fulfilled in the very same way they took
00:44:15their application digitally. Very high convenience, very great for a scheduling process. And by the way,
00:44:21it tends to shorten that lending cycle considerably because you're not trying to schedule with a
00:44:27notary at the branch, but you still have the opportunity to engage that consumer and close
00:44:32that transaction in a very friendly way with very knowledgeable individuals.
00:44:37Absolutely. And, you know, Impact, you mentioned that, you know, the title component not being done
00:44:44correctly has long drag in the process and clearing things, borrower experience. You know, there's
00:44:54solutions out there. We've seen that, you know, we see individuals that are not experts trying to clear
00:44:59title and elongating the process or doing it incorrectly and having large impact.
00:45:04So looking at vendor partners that can help clear title quickly and effectively and correctly is
00:45:10is also a time saver in the long run. Yeah. And a quality product that the vendors are willing
00:45:17to stand behind. Yeah. If we deliver a title product, you want to stand behind that's accurate.
00:45:22You don't want to, you know, quote unquote, date a product that the risk is put on the lender to
00:45:26underwrite and then ends up having issues at the back end at the last hour when you're trying to close
00:45:31a transaction and find out you can't record it because the title search missed the correct D,
00:45:37there was an out sale, things along those lines.
00:45:41So here you're looking at cycle time and compression there. What are your thoughts there?
00:45:49Yeah, without spending too much time, because the fact that we're getting near the end here,
00:45:53it's really looking at every step of the process and looking at ways to shorten those process.
00:46:00It's not going from a full manual process with an expert to something that's done in five seconds.
00:46:07Well, that'd be great. It causes other issues I mentioned on the back end.
00:46:10So it's making sure you have a high quality product at each step and then looking for
00:46:14opportunities to eliminate those outliers. The outliers are really the things that extend
00:46:19that cycle time and provide that bad borrower experience. You know, the appraisal that takes
00:46:24three weeks, things along those lines. That's what you have to eliminate throughout the process
00:46:29to be able to get that cycle time down to 15 days or less in terms of application to close
00:46:35and fund
00:46:35on a home equity line. Real quick, Ken, this is some data that you've provided around borrowers,
00:46:47where we see the cycle times here. You know, from your perspective, Steve talked about a lot of the
00:46:57things prior about what things are doing. But, you know, you see banks and credit unions running a little
00:47:04bit longer than fintechs, not necessarily always the same apple to apple comparison because of how
00:47:11the two different groups operate. But anything quickly that you have seen from all of your insight
00:47:17that drives those cycle times down and drive success for, you know, a fintech closing almost 60% in under
00:47:2815 days?
00:47:30Yeah. So, if I just kind of combine banks and credit unions, call them depositories for the moment.
00:47:39So, commonly where we find the challenge is banks will do more of the complex stuff is probably the
00:47:51most fair way to say the most fair way to say that. When I say stuff like, you know, revocable
00:47:56trusts,
00:47:58flood properties, stuff like that takes time. The lenders that we see doing things efficiently
00:48:09and that are standing out and making some ripples in the market have a differentiated process of loans
00:48:18that can go fast versus loans that we know are going to take some time and additional FTEs to put
00:48:25their
00:48:25eyes on. The lenders that are more efficient have differentiated processes to say,
00:48:32your, you know, wage income, I can do an AVM, I can do a legal investing, I have all the
00:48:39docs,
00:48:40there's no reason this is going to take me 30 days. So, that is going to go to the fast
00:48:45path
00:48:46versus, you know, path B, let's just call it. But if we're commonly lenders fall into the traps of what
00:48:54we see displayed on the page of, you know, less than a third of all applications falling into that shorter
00:49:00window, everything else falling well over 30 days is everybody goes to the same funnel,
00:49:05waits in line at the same speed, even though I can and want to move fast, I'm stuck in the
00:49:11same path
00:49:12and the same line as everybody else. So, some value of starting to look at their overall process,
00:49:21you know, we can deliver an instant title, you can deliver an instant valuation through an AVM,
00:49:26but if it goes into the generalized queue, you may have a long, elongated process that impacts borrower
00:49:35satisfaction that there's values of looking at your process as a whole.
00:49:41100% in creating those caveats of the type and the quality and the situation, like it can't just
00:49:52be all your HELOCs go here, all your home equity loans go here. It needs to be much more purposeful.
00:49:59And they even can be in the solutions and your solutions that Steve was just talking about of,
00:50:06we can leverage the stack of solutions for pipeline A and we might have a more varied suite of solutions
00:50:15to deliver on pipeline B, based upon the likelihood that borrower can close fast.
00:50:22So, we kind of talked on speed and the fact that, you know, we do see non-depository lenders
00:50:31be a little more selective of who they sometimes work with, but this is a pretty significant draw
00:50:40disbursement that we're seeing, right? That in the speed, meaning need versus nice to have,
00:50:48any thoughts on this or what you've experienced in the last couple of years as we've seen non-depository
00:50:54HELOCs grow?
00:50:57Yeah, listen, you know, I love fintech lenders. I like what some lenders and, you know, that are IMBs are
00:51:08doing in the home equity space. I think it's all good for the industry because they are
00:51:13they're changing the status quo of the borrower experience. And I think what's displayed here is
00:51:23when you move fast and create a pleasant borrowing experience, you're going to, in many cases,
00:51:31attract that borrower that is motivated to move fast. They have a need and they are motivated to move
00:51:38fast. So the one important thing here that I will mention and just make sure we're all on the same
00:51:46page with this is, yeah, a lot of those non-depositories like the fintechs of the world,
00:51:51they have required draws associated. So a lot of the pushback I get when we look at this,
00:51:58a view like this is, well, you're forcing the draw on the right-hand side, but it's a
00:52:03draw on demand on the left-hand side. Totally fair statement. But if we're talking about we're all
00:52:09competing for the same borrower for their needs, at the end of the day, why is there nearly a 50
00:52:15% or 40%
00:52:17gap in the balances that fintechs are getting on day one of that HELOC? It can't be because you sell
00:52:26a different product. If we're talking about the same borrowers with the same needs and the same
00:52:30opportunities, it really has highlighted what you see in the bottom is, if I can deliver something
00:52:36three to four weeks faster and have a seamless digital end-to-end experience, those are the customers
00:52:43that need money and they need money fast. And that's really what's at risk here if you sit back
00:52:48and don't do anything about your borrower experience or your fulfillment processes.
00:52:55So that kind of leads into where we see the next kind of, when you look at the generational aspect
00:53:05of it, where people want to be met, boomers generation, mostly in branch, going down to Gen Z,
00:53:17being mostly looking more digital experience as it goes down, meeting the borrower where they want to be,
00:53:25having that experience, having online application and faster qualification has an impact.
00:53:35Anything else? I'm weird. I'm a Gen X-er, but I still go in the branch for everything.
00:53:45Yeah. I've been called a couple of times. I don't really appreciate it, but I've been called a
00:53:50geriatric millennial, so is what it is. But I'm with you. I like a branch, but I couldn't tell you
00:53:57the last
00:53:57time I've been in a branch. But for our audience here, I think what you take away from here is
00:54:05we have
00:54:06to understand who's next up, who is our primary target customer right now. I'm not going to say
00:54:13any of these generations on the page aren't your customer, but you can probably pick which
00:54:18generations are likely going to have the most opportunity, i.e. it's not the generation with all
00:54:24the equity. It's generation with the debt. And when you look at it through that lens, the generation
00:54:33with the debt and with the needs are certainly the ones that are saying, I'd like a branch, but I
00:54:40prefer to do my transactions digitally or through a phone call. Don't make me put on shoes and get in
00:54:46the car and drive to a branch to submit an application or close a loan. Make it easy for me.
00:54:52And it really
00:54:53ties back to that previous slide. If you make it easy for me and we can do it fast, these
00:54:58are the
00:54:59generations that are saying this is their much more highly preferred mode of entry of how they choose
00:55:05business, who they do business with.
00:55:11With that, you know, there's the slide. Sorry, it's a little delayed here. You know, cycle time,
00:55:21two-plex weeks to fund. This is an interesting slide because we talked about the products early on making
00:55:29the decision, but then we're seeing from approved to booking, in some cases, taking a week or two.
00:55:39What do you think is causing that? And where does, what is the impact there? What should lenders be
00:55:44thinking about to shorten that to benefit from the impact and borrower experience?
00:55:51Yeah, that can be for either of you, Steve or Ken.
00:55:55I'll just give a quick two cents and hand it over to Steve because you have the solution,
00:56:00but we're on the same page there. To me, two-plus weeks after the loan has been final approved to
00:56:06actually put money in hands is way too long. You know, the loan is done at that point and the
00:56:13borrower is waiting for their money. I like to think of myself as a patient person, but telling me I'm
00:56:19approved and I don't get that money for two more weeks would be quite frustrating for me. So we need
00:56:26to find those solutions and deliver those solutions that we are able to meet the promptness and the
00:56:33expediency that borrowers are expecting through other solutions to be able to shorten that to,
00:56:42you know, two to three days versus 15 to 16 days.
00:56:47No, agreed. And Steve, this kind of queues up because we have some questions around, you know,
00:56:52what are you seeing lenders do to shorten this cycle and driving success in their programs?
00:57:00Yeah, and I see you only got three minutes here, so I'm going to rapid fire through this, Josh. So
00:57:05really, you know, on the front end, as I mentioned before, a good product mix that identifies and
00:57:11eliminates issues before you go through the entire approval process. You don't want unexpected issues
00:57:17popping up three, four, five days into the process. You want to have good title and you have good
00:57:22valuation soon. It should be less than a week to have that and it's not going to give you surprises
00:57:28or complex issues. You want your vendors to be eliminating issues for you and solutions as opposed
00:57:33to creating them down the line. And on the back end, you know, you have up here on the slide,
00:57:38you know, the screen, you know, Ron or mobile notaries is really what we see best in practice
00:57:43in terms of getting a good convenient closing done quickly. Also happens to be great to prevent fraud,
00:57:50which is one, identity fraud is one of the largest issues we're seeing today in the market. You know,
00:57:55if you're doing a mobile signing and you do it at the actual securitization property, that eliminates
00:58:01identity fraud in the vast majority of cases. Those individuals may have all the data, they may have fake
00:58:06IDs, they may have all the information, access to your credit bureaus, etc., but they don't have
00:58:12access to the house, that mobile signing can occur in that home. Same thing on the Ron side, you know,
00:58:17no one wants to commit fraud on video because now you have proof that fraud was committed and it's a
00:58:22lot easier to prosecute. So what we see today is fraudulent identification. Generally, those deals
00:58:29cancel and don't close when they're told that the mobile notaries are going to come out and sign at
00:58:34their house or if it's going to be a recorded video transaction. So we have been very fortunate
00:58:40in that regard that we've been able to prevent some fraud cases and provide a very convenient
00:58:44borrower-friendly or consumer-friendly signing process with a very knowledgeable individual who's
00:58:50trained to identify fraud. And we're kind of down to the last minute here. You know, one of the things,
00:58:58two of those we see for success with a lot of lenders is those that have fully integrated into
00:59:05their LOS systems, strategic partnerships there, where the elimination of manual entry eliminates
00:59:13mistakes. It just makes things move a heck of a lot smoother and more effectively. And we think
00:59:20that's a key component to look at who your LOS is tied into and who they can partner with to
00:59:26create
00:59:26that efficiency on your side. In the last minute, Ken, Steve, any thoughts on summarizing just the
00:59:34strategic playbook around home equity is still going to be a large player in 26, a great avenue for
00:59:41borrowers, but what should lenders be looking at as we wrap this up?
00:59:49Capture rate, great borrower experience, and moving quickly through the process without sacrificing
00:59:55those other components, risk quality and borrower comfort for speed. Don't just sell off for speed.
01:00:02You want to have a very quick product, but it has to be an accurate product.
01:00:06Ken, any final thoughts?
01:00:08I'll summarize. We had a question in the chat of, you know, what are examples of lenders
01:00:13that do an exceptional good job of selling HELOC products?
01:00:17It is having the right products, an educational-based sales process that helps educate the borrower,
01:00:26helps educate your fulfillment staff of the needs of that borrower,
01:00:30wrapped into having the right suite of solutions to be able to expedite that borrower through the process.
01:00:37That is nine out of 10 times, that is exactly what we see of lenders that are doing it right.
01:00:47And then Allison is back.
01:00:50I am back. Steve, Ken, Josh, webinar time goes fast to our audience.
01:00:56I know there were many questions that were in the Q&A, and there are a couple in the chat.
01:01:01Rest assured, we will be turning them over to Steve, Ken, and Josh so that they will be able to
01:01:05get
01:01:05back to you with answers. I want to thank our panelists for their insights today on the evolving
01:01:12state of home equity in today's mortgage market. And thank everyone who attended today's webinar.
01:01:17We appreciate your time and participation. As mentioned in the beginning of the webinar,
01:01:23Housing Wire is passing out a recorded version of today's session that will be sent to all
01:01:28registrants. So if there's anything that you want to go back, visit, look back at the data for,
01:01:34you will be able to do so in the on-demand version. Thank you so much for being with us
01:01:39today.
01:01:39I hope to see you all again soon. Thank you. Thanks, Allison. Thanks.
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