By Keith Marvel on February 06, 2023

How to Transfer HELOC Credit Risk to Grow Your Portfolio Safely

The continuation of a revitalized home equity lending sector is attributed to many factors, including reduction in disposable income, rising credit card balances, and inflation. HELOC growth is expected to rise in 2023, and growing your borrower portfolio will require expanding your pool of prospects in new ways.

To capitalize on consumers looking for alternative sources of funding like HELOCs, lenders must be prepared with solutions.

Ensuring your organization is best positioned to grow your portfolio can be accomplished in a few keys ways:

  • Increase your distribution of potential borrowers via risk transfer products which offer broader credit score and CLTV eligibility

  • Offer best-in-class digital delivery & automated decision making capabilities, designed to create an optimal customer experience.

To optimize portfolio utilization, lenders should consider diversifying their origination strategies to include a variety of credit segments. We recognize that many lenders avoid risk by seeking out high-credit customers.

Though super-prime borrowers offer less risk exposure, they also commonly have the lowest levels of credit line usage in comparison to other borrower groups.

If you seek to expand your HELOC portfolio, the Equity Protection Program (EPP) creates an opportunity for greater asset allocation optimization when considering all acceptable borrowers.

What is EPP?

The Equity Protection Program (EPP) is an industry-leading insurance solution used by over 300 financial institutions nationwide to boost home equity originations and protect their balance sheets. 

This single-interest coverage is transparent to the borrower and provides access to more inclusive underwriting guidelines, while allowing lenders to adhere to existing workflows related to loan processing and collections. 

Moreover, a unique risk transfer approach allows lenders peace of mind regarding any potential credit losses due to borrower default.

Consider attending this complimentary webinar to learn how your financial institution can also use the insured loan program to grow & maximize HELOC lending in 2023.

Please feel free to reach out anytime and Ask Us Anything.

Published by Keith Marvel February 6, 2023