Tech providers zero in on home equity lending

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With interest in home equity lending on the rise, ICE Mortgage Technology and Figure are rolling out tool enhancements for business customers aimed at expediting originations and attracting customers. 

Borrowers managing loans via ICE's MSP servicing platform will be able to quickly apply for new home equity lines of credit and loans, as well as mortgage refinances, thanks to a new integration between the consumer-facing portal and the company's Encompass loan-origination system. The integration is available at no additional cost to ICE's business customers already under contract on both platforms. 

With a few clicks, homeowners on the consumer MSP portal will be able to apply for a new loan, with data prefilled on forms based on existing data in the servicing platform. Upon submission, applications will be then processed by Encompass. 

"Now, lender-servicers can deliver a self-service home equity and refinance lending experience via an interconnected technology platform — helping them recapture more business, deepen customer relationships and reduce operational complexity," ICE Mortgage Technology President Tim Bowler said in a press release.

"Supporting a modern, customer-friendly experience that promotes lifelong borrower retention on the front end and operational efficiency on the back end is key to lender performance," he added. 

The news comes following other ICE tech updates introduced over the last 12 months specifically focused on opening up home equity lending opportunities, including the late 2024 integration of MSP with its home valuation tool. 

The link between MSP and Validate offers homeowners a glimpse into their available accrued equity as well as an option to apply for a new loan. ICE would also alert the business customer of a potential new borrower. 

Figure emphasizes loan consolidation with new offering

In a similar move, lending fintech Figure announced it had incorporated the capabilities of its direct debt payoff tool with its HELOC application portal. The upgrade is expected to open up the company's HELOCs to more customers and make a Figure line of credit an alternative to a full cash-out refinance, the company claimed. 

With Figure's Intellidebt option now available to them, HELOC borrowers will be able to pay off their most junior lien and consolidate other unsecured debt through the same application. The integration can qualify more borrowers thanks to improved combined loan-to-value and debt-to income ratios, Figure said. Once the lien and loans are paid off, borrowers are automatically requalified. 

"Lenders have been looking for a cost-effective solution for lower balance loans as they can be expensive to originate, so we're pleased to expand access to low-cost, low-balance refinance options," said Figure CEO Michael Tannebaum in a press release.  "It's a win-win-win for homeowners, their loan officers and the institutions that serve them." 

The home equity lending outlook

The new technology announcements arrive as numerous mortgage industry leaders see housing trends pointing to a marked increase in the originations of HELOCs, closed-end second liens and other types of home equity products in the next two years.  

Last year, originations of home equity lending products rose by over 7% annually, according to the Mortgage Bankers Association, with the amount of associated debt expected to continue heading upward. Home renovation and debt consolidation are cited by consumers as the most common reason for taking out a HELOC or HELOAN, the trade group also found. 

Homeowners currently sit on a tappable amount of $11.5 trillion in accrued equity, ICE noted earlier this summer, with much of it accumulated after the record surge in property values earlier this decade. 

At the same time, companies are looking at methods to better serve lenders, including updating terminology to standardize the language used in HELOC originations. 

The latest attention being paid to home equity lending by the mortgage industry continues a trend that emerged in 2022 when interest rates shot up suddenly, extinguishing consumer demand for refinances. With the onset of surging rates, several nonbank lenders moved in to offer HELOCs, a product that had traditionally been the purview of banks.