|
Special Reports
Home Equity Lending
HELOC Shows Response to Demand
by Amilda Dymi
It always is challenging to figure out what product would qualify as the most
popular at a moment in time. So I would rather shoot for products that respond to current market demand, such as
home-equity lines of credit.
QuickClose Equity Line, an Internet-based product launched by EverBank Financial Corp. of Jacksonville, Fla., took
quite some time to develop, the bank says, so it would be one of the most customer-friendly HELOCs in the market.
QuickClose allows for fast loan application submissions, approval within seconds and competitive interest rates.
There are no closing costs to the customers and generally appraisals are not required. QuickClose benefits to customers
include rates as low as prime, currently at about 6.125% less 51 basis points for the life of the loan; and a "dramatically"
streamlined mortgage process that eliminates many of the steps required in the traditional loan application process.
Among the highlights, the bank notes that QuickClose also "provides the convenience of a revolving line of
credit to access cash against the equity in their homes and the flexibility to borrow or pay down balances as their
cash flow allows." Customers can apply for QuickClose loans of up to $250,000.
"It is one of the industry's more convenient HELOCs from the application and origination standpoint. We guarantee
qualified applicants will receive their closing papers at their door within 12 days," said EverBank senior
vice president, John J. Surface. "It really gives them the ability to tap into the equity of their home but
not go through as much of the painstaking mortgage process they traditionally have to."
QuickClose applicants need to supply a reduced level of information so it takes about 10 minutes to complete the
form. Reduced borrower information intake on the other hand does not increase loan risk, he said, since it follows
investors' specific requirements for the information they need on secondary market loans they buy. And HELOCs have
reduced the information required to make those loans liquid.
"Obviously, they still are very focused on the credit quality of the borrower and the integrity of the collateral
behind it," he said. For instance, borrowers are not required to provide two months of pay-stub data.
"It really is the investors in this product who are asking for less information than they are asking for a
first mortgage product," he said.
It is a more streamlined process from the customer standpoint because rather than asking for a complete data set
with some required personal information, or asset and income verification as is required for a first mortgage,
the whole application process is easy to navigate.
That's the first benefit to a customer when they apply for the loan since it takes comparatively less time and
information. The second benefit, the executive said, is EverBank's automated underwriting system that allows it
to return underwriting responses within minutes. "Typically it takes us less than 60 seconds for us to find
an underwriting response. Once a customer is approved, we'll mail a closing package to his/her home within seven
to 12 days," he said.
So far, EverBank has been working directly as a lender and offering it directly through its customer channel. According
to Mr. Surface, the bank plans to offer the product through its wholesale network, which originates close to $10
billion.
Brokers will benefit from the convenience the system creates for customers by allowing them to close loans at home
but without using electronic signing.
"Frankly I do not know of many products that allow you to stay home during the entire process, because the
last part of the process is the closing. We have an in-house notary closing that allows borrowers to set up a convenient
time for them to sign all the papers at home," he said. "It is a lot nicer than having to go to an attorney's
office."
As mentioned, in addition to a shorter and streamlined application, underwriting and closing process, customers'
benefits include prime rates and a line of credit that allows them to borrow against and use their equity as part
of their financial planning process, he said. Also, as a rule, appraisals are not required.
"Not that we are not taking a look at the collateral of the home, but to verify, we are using as an appraisal
an automated valuation model, which uses a big database of home values that are kept by third parties that have
been found to be very reliable by the investors," Mr. Surface said. "So we do rely on those."
However, not all customers qualify for the lowest rate. While the maximum annual percentage rate for a home-equity
line is 18%, borrowers are required to pay all applicable state taxes and recording fees. If the borrower terminates
the line of credit for any reason within two years of the closing date, all lender-paid closing costs - ranging
from $150 to $1,000 - must be repaid to the lender.
"Home-equity lines of credit are a flexible tool for consumers to obtain funding," Mr. Surface said.
"When used responsibly, borrowing against home equity is an easy and convenient way for people to unlock the
value of their residence at attractive rates that are usually tax deductible."
If customers need help finding the right loan product to fit their needs or simply need assistance with the loan
process, loan officers are available seven days a week. The product can be used to finance home improvements, college
tuition or car purchases.
With approximately $3 billion in assets, EverBank provides national banking, mortgages, wholesale and commercial-lending
products directly to consumers and through various business partners including financial advisors and brokers.
|
