Home Equity Lines of Credit (HELOCs)

Home Equity Lines of Credit (HELOCs) are experiencing a resurgence due to both homeowners having trillions in tappable equity as well as many being locked into low-rate mortgages. Borrowers are seeking liquidity without refinancing. Banks and independent mortgage lenders are responding to this by expanding HELOC products, increasing limits, and embracing new technology and digitization. Current areas of focusing include securitizations gaining momentum, rising fraud threats, and intensifying competition is intensifying. HELOCs have re-emerged as a strategic growth lever for mortgage professionals.

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Younger homeowners more likely to be HELOC borrowers

Millennial homeowners are more likely to be current and future users of home equity lines of credit than either Gen-Xers or baby boomers.

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Mill City adds HELOCs to $336M reperforming RMBS

Mill City Holdings is returning to market with its fourth securitization of reperforming residential mortgages, this time with a sliver of home equity lines of credit added to the mix of collateral.

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Frequently Asked Questions:

What is driving the increased demand for HELOCs in 2025?

Homeowners want to access equity without sacrificing their existing rates due to mortgage rates remaining elevated. This scenario has increased demand for HELOCs, rebounding to pre-2008 levels. Lenders like Achieve Home Loans securitizing $210.9 million in HELOCs to meet funding needs.

How are banks and other institutions competing in the HELOC space?

Banks have traditionally offered advantages related to portfolio and pricing, while independent mortgage banks offer speed, flexibility, and digital access. Banks vs IMBs: who wins the HELOC war explores how originators are differentiating and how quickly dynamics are shifting.

What are the main fraud risks that HELOC lenders are currently facing?

As HELOC originations become more digital, new vulnerabilities are emerging. Consumers are increasingly at risk of fraud from identity theft, fake occupancy claims, and elder-targeted scam.

What does a real-world HELOC fraud scam look like?

As more lenders enter the second lien market, a scam involving an identity thief who stole $2 million through HELOC fraud highlights the necessity of stricter borrower verification and title controls.

In what ways is the mortgage industry updating HELOC closings and documentation?

The Mortgage Industry guidelines Maintenance Organization (MISMO) released eHELOC SMART Doc standards to make digital closings more similar across systems and investors and to make things go more smoothly.

How is the secondary market responding to rising HELOC volumes?

Investor interest is increasing with HELOC deals now drawing institutional capital at scale, especially among those using emerging technology. Figure’s AAA-rated HELOC securitization’s blockchain-based home-equity line of credit securitization was the first of to receive a AAA rating from a major rating agency.