InsightsBalancing Home Equity and Refinance Volumes: How Technology and Strong Partnerships Can Help

Today’s borrowers are facing unprecedented economic uncertainty, and many are turning to the equity in their homes to help stabilize their finances. As a result, lenders are receiving high volumes of inquiries from consumers curious about the options for tapping into the equity in their home. But what does this influx of demand mean for today’s real estate lenders? How can they best meet today’s borrowers’ needs in a challenging environment and keep pace with demand – without increasing their risk?

In this high-demand environment, borrowers are exploring financial products from non-traditional players based on lower costs (70%), ease of use (68%) and faster service (54%).1 To maintain and expand their customer base through the tremendous need, more traditional lenders must explore tech-forward solutions to deliver the experience today’s consumers demand.

“Home equity is a space that has not historically been technology-forward,” says Barry Coffin, Managing Director of Home Equity Title and Close for ServiceLink, “As demand grew for fast, digital solutions, ServiceLink envisioned how technology could improve the speed and level of service for both the lender and borrower. Our clients – home equity lenders of all sizes – quickly realized the value of our tech-enabled services.”

Products like ServiceLink’s EXOS Close support virtual closing options for both refinance and home equity loans in all 50 states and the District of Columbia. This allows borrowers to facilitate digital closings via online video conferencing programs, which became critical as many borrowers were reluctant or unable to attend in-person signing events. Beyond meeting social distance requirements, virtual closings give borrowers the experience they expect. According to a survey recently conducted by Javelin Strategy and Research at the request of ServiceLink, consumers agreed that eSignatures are easy and convenient (89%) and save time in large transactions (88%). In addition, consumers expressed interest in using them specifically for mortgage applications (79%).

Inspections and appraisals are also an area of focus, and lenders sometimes turn to automated solutions to avoid bottlenecks in the system. However, according to Moody’s Investors Service, “Automated Valuation Models (AVMs) typically assume all properties are in average condition and still exist. Thus, values cannot be adjusted up for upgrades and extensions or down for disrepair.”2 So, lenders have begun exploring ways to combine AVMs with other data sources in order to minimize risk, while saving time.

“Our goal with all of our solutions is to simplify and expedite the process, as well as improve accuracy,” say Phillip King, Vice President, Principal Product Manager for EXOS Valuations, “Our latest innovation, EXOS Inspect, does all of the above while decreasing the risk for lenders by giving them better tools to evaluate the home.”

EXOS Inspect is a mobile app that allows borrowers to conduct their own home inspections when a traditional appraisal is not required, such as in home equity lending. In that space, EXOS Inspect enhances lenders’ risk management strategies, by ensuring they have the most up-to-date information on the house. In fact, the application uses geo-fencing and time-stamping to assure the accuracy of the borrower-submitted inspection. It can be combined with other ServiceLink offerings including AVMs, Title, Flood and Desktop Appraisals.

Risk due to today’s uncertain economic climate has temporarily slowed home equity lending, while refinance applications continue to boom. Many lenders have temporarily shifted their focus to first mortgage cash out refinancing, with full confidence that home equity loans will make a comeback.  In this rapidly changing market, ServiceLink offers the flexibility to work with lenders on solutions to meet their current needs. As volumes swing between refinance and home equity, ServiceLink will be poised to help lenders close more loans, faster.

ServiceLink is the nation’s premier provider of tech-enabled mortgage services. ServiceLink leads the way by delivering best-in-class technologies, a full product suite of services and proven experience, built on a foundation of quality, compliance and service excellence. For more information about ServiceLink, please visit https://www.svclnk.com/.

1 Business Wire (October 29, 2019) World Retail Banking Report: Inventive Banking is Key to Maximizing Banks’ Strongholds on Delivering Exceptional Last-Mile Customer Experiences https://www.businesswire.com/news/home/20191028005732/en/World-Retail-Banking-Report-2019-Inventive-Banking

2 Moody’s Investors Service (February 15, 2018) Use of appraisal alternatives is likely to grow, posing new risks https://www.appraisalbuzz.com/wp-content/uploads/2019/08/Use-of-appraisal-alternatives-moody.pdf

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