Signs of Life in Home Equity Lending?

The second lien market has been on the decline since the housing bust of 2008, but there’s growing evidence that business is beginning to gain traction.

According to new survey figures compiled by National Mortgage News, residential funders of all different stripes originated $5.59 billion of seconds in 2Q, a 23% improvement from the same period a year earlier.

In the first quarter, the origination of seconds grew by roughly 40% year over year.

The results appear in NMN’s Alternative Products Quarterly Data Report. Although many lenders are willing to disclose first lien production they are less forthcoming on the origination of closed- and open-end seconds. (Also, many nonbanks do not even play in the sector anymore.)

Wells Fargo & Co. and Bank of America continue to rank first and second, respectively, in terms of second-lien fundings, with combined originations of $3.5 billion in 2Q. Wells’ volume, however, is an estimate based on previously reported numbers.

Still, there are signs of life. Roughly 23 firms reported second-lien figures to NMN compared to 21 in 1Q. Banks such as PNC are actively advertising home equity products in television commercials and print ads. Credit unions are active in HELOCs, at least in the Washington market.

Jim Francis, executive vice president of Union Bank, San Francisco, told NMN recently that his company is making more HELOCs these days, but cautioned that borrowers “are not drawing on their lines very much.”