Home Equity Lending News

CUSOs Align to Address Rising Home Equity Demand


Though interest rates on home-equity loans remain elevated, demand for closed-end seconds is rising at U.S. credit unions — so much so that two credit union service organizations have partnered to reach more credit unions that offer CES products.

CU*SOUTH, a CUSO offering core processing, accounting, collections, and information technology management services, and Mortgage Center, a CUSO that provides mortgage origination and servicing for credit unions, recently announced a strategic alliance to help credit unions elevate their home-equity offerings.

Dani Soave, Mortgage Center

If a credit union doesn’t have enough staff to originate home-equity products on its own but wants to offer CES products to its members, the partnership will make it possible for them to do so, Dani Soave, Mortgage Center’s assistant vice president of digital marketing, told HELN in a phone interview.

“We have some fixed-rate options that they can participate in very quickly to get them up and running,” she said.

Soave explained that the alliance was formed in response to a trend that emerged during Mortgage Center’s discussions with CU*SOUTH.

“They were mentioning that a lot of credit unions within the southern states just don’t have the resources in order to do home-equities on their own,” she said. “That’s where we come in. We have the expertise for compliance. We have the expertise for service. We’re here to help in any way possible.”

According to Bankrate data, which is based on a loan amount of $30,000, a FICO score of 700, and a combined loan-to-value ratio of 80 percent, the average interest rate on 15-year home equity loans stood at 8.91% as of February 7, down from a high of 9.13% on November 1, 2023.

Despite these persistently elevated rates, home-equity loans “are still very popular,” Soave said.

She noted that consumers who purchased or refinanced homes in 2020 and 2021, when mortgage rates were low, are now looking for ways to access their home equity that won’t interfere with the rate on their first mortgage.

CES, offered with five, 10, or 15-year terms, “are really great options for the members to tap into their equity so they aren’t changing their first-mortgage interest rate,” Soave continued.

While she declined to disclose details on the number of CES transactions Mortgage Center has originated or the size of their servicing portfolio, Soave did note, “Right now, 4.5 percent of our loans in our portfolio are actually home-equity loans.”

Angela Rose is a freelance reporter for Home Equity Lending News. Her nearly 15-year journalism career included work for a variety of news publications like Women’s Magazine and CompanyWeek. Angela studied journalism and mass communications at the University of Colorado. Reach Angela at [email protected].