LoanDepot, New American promote more creative home equity loans

LoanDepot is extending a discount to its home equity line of credit customers, the latest mortgage firm to adapt its home equity product as purchase originations continue to waver.

The lender and servicer last week announced its Lifetime Guarantee would apply to eligible HELOC borrowers, giving them an extra half-point waiver of closing costs in subsequent refinance transactions. Purchase and refinance borrowers are already eligible for the guarantee.

"Just as we created the loanDepot HELOC, allowing customers to access record levels of equity, the Lifetime Guarantee can further support their financial goals when the time is right for a refinance," said Frank Martell, loanDepot president and CEO, in a press release.

LoanDepot rolled out its HELOC product late last year following a significant internal restructuring which included the closure of its wholesale channel. The HELOC is available to consumers in 34 states, and the Lifetime Guarantee can be redeemed 12 months after an origination. The program isn't available for borrowers who apply for loanDepot products through third parties, or who originated their mortgages through the firm's correspondent or former wholesale divisions, it said.

The company is touting its HELOC as one of the faster products in the industry with a closing in as few as seven days. Across the HELOC landscape, lenders have sought to stand out by promoting their product's speedy closing, with Bluefire Mortgage as the latest to introduce a 5-day HELOC turnaround.

Home equity lending volume rose 41% year-over-year in the third quarter last year, as high interest rates kept purchase originations at bay. The 322,537 closed-end home equity product originations over that time was the highest quarterly activity since 2010, according to TransUnion.

Home loan players meanwhile have also launched more unique solutions for borrowers to access their home's value. 

New American Funding and fintech EasyKnock partnered last month to bring a sale-leaseback program to the massive lender and servicer. With EasyKnock, homeowners can sell their homes to the company and stay on as renters, meanwhile converting their equity into cash and retaining the flexibility to repurchase their homes on their own timelines.

"Around a quarter of American homeowners cannot access their own equity in their homes because of strict lending restrictions, and we have teamed up with New American Funding to service these communities," said "Jarred Kessler, CEO and founder of EasyKnock, in a press release.

The New York City-based EasyKnock was founded in 2016 and claims to be the first-to-market tech-enabled sale-leaseback company in the United States. The fintech joined forces with one of the industry's larger players, as the Tustin, California-based lender and servicer counts a servicing portfolio of approximately $64.2 billion.

Another alternative home equity provider, Splitero, also raised $11.7 million in a Series A round, it said last month, allowing it to expand on the West Coast. The San Diego-based fintech gives homeowners a lump sum of cash in exchange for a share of their property's appreciation in a Home Equity Investment transaction. Borrowers don't have to meet minimum income or credit score requirements or pay monthly sums to be eligible for the program, Splitero said.

The rise in HELOCs last year came amid decreasing home values on the heels of fading demand. The total value of U.S. homes sat at $45.3 trillion at the end of the year, down 4.9% from the record-high $47.7 trillion in June, Redfin reported Wednesday.