HELOCs on the Horizon

Rebounding equity values mean Homeowner Remodeling
Will Follow on Cash from Home Equity Lines of Credit

National Mortgage News reported last week that rebounding home equity is emboldening homeowners to dust off the remodeling blueprints they shelved when property values dropped a half-decade ago. Property owners are now ready to make home improvements and catch up with deferred maintenance, and many will be turning to home equity lines of credit (HELOCs) for the funding.

Industry insiders anticipate a coming surge in applications for new equity lines of credit, and that will require streamlined processing of credit reports and income verification.

National Mortgage News reported that in the next 12 months "more and more owners [will] regain some – or perhaps all – of the equity lost in their homes during the recession."

The Road to Remodeling Home Equity

Researchers at Harvard University's Joint Center for Housing Studies are quoted, forecasting that more home equity means a return to remodeling.

"Existing home sales were up almost nine percent last year, and house prices are increasing in most markets across the country," said Eric Belsky, managing director of the Joint Center. "This has increased the home equity levels for most homeowners, encouraging them to reinvest in their homes." By the fourth quarter of 2013, the program expects home improvement spending to reach an annual rate of $150 billion.

According to the Federal Reserve, equity positions rose an estimated $1.7 trillion nationally in the past 18 months alone, and banks "are allowing owners to tap that equity," writes Lew Sichelmann in NMN.

Kenneth R. Harney, writing in the New York Real Estate blog, The Real Deal, agrees.

"The tools that allowed owners to pull out massive amounts of money during the boom years — equity credit lines and second mortgages — are making a comeback."

Harney writes that banking and credit analysts say the dollar volume of new originations of home equity loans are "rising significantly in areas of the country that are experiencing post-recession rebounds in property values." Those "hotspots" include about half the country: the Atlantic coastal states, the Pacific Northwest, California, Arizona, New Mexico, Texas, and parts of the Midwest.

The Future of Lending and Equity Lines in America

With the impact of the recession still felt in communities across America, the lending community will be especially vigilant on approving these equity lines. From the credit checks and income verification that establish eligibility to the flood zone certifications, title searches, and appraisals that establish ownership and set limits on those equity lines, lenders need tools for verification and credit checks.

All these products and services are available in convenient and cost-effective custom packages through NCS, including the nation's original TRV Services for tax return verification. For more information on bundled product offerings contact us or call us at 800-582-7066.