A wholesale lender that offers junior-lien home-equity lines of credit to third-party originators has added a first-lien product.
Even as banks have reduced their home-equity investments over the past year, junior-lien holdings at the country's credit unions have surged 28%. Amid the growth, however, lurks concern about current financial conditions.
Changes in homeowners' equity swung from a quarterly loss to a quarterly gain. Meanwhile, the lack of mortgage originations has driven down the nation's average loan-to-value ratio by 1.6 percentage points over the past year.
Mortgage brokers and other third-party originators of second mortgages for home-equity extraction have another available wholesale mortgage program to choose from with PennyMac's introduction of a new junior lien product.
Origination of home-secured credit lines has been subdued because interest rates on the open-end product have risen so much more than on first mortgages. The outlook calls for a worsening spread.
A pair of upcoming issuances that include home-equity lines of credit originated by Figure Lending LLC both have yields in excess of 11%.
An upcoming securitization featuring home-secured credit lines from Figure Lending LLC will be the fourth such deal this year. The transaction is primarily backed by second liens, and the spread between yields on the junior and senior lien pools was only 67 basis points.
Quarterly originations of home-equity lines of credit declined from the prior period and a year earlier. At the same time, banks have been tightening their HELOC guidelines amid softer demand. But the number of HELOC securitizations this year has more than tripled as the private capital markets grab a bigger share of the business.
Although the volume of new open-end real estate secured lending has slowed significantly from last year, the latest month's activity represented a strong start to the holiday season.
The latest anecdotal evidence from the Federal Reserve System indicates that a growing number of homeowners are turning to home-equity lines of credit and home-equity products.
Defying an overall contraction for the entire banking sector in home-secured credit-line holdings, community banks loaded up on the open-end assets in the latest quarter. Open-end home loan performance, meanwhile, deteriorated.
A Peach State direct lender that operates in most of the country is offering second mortgages with combined loan-to-value ratios of 100% in tandem with government and conventional home purchase transactions.
Home renovation loans secured by the borrower's property are sometimes utilized by shady home improvement contractors who are looking to grab the loan proceeds and run.