Increase Your HELOC Lending ROI

  •  By Ellie Mae

Author: Rebecca Frisbie, Senior Product Manager at Ellie Mae

A consumer’s ability to tap into the equity in their home is a powerful financial tool. HELOCs, or Home Equity Line of Credit loans, have been around for quite some time. However, the economic downturn in 2008 cast a negative light on these loan products as they were commonly used in irresponsible ways. HELOCs originated between 2003 to 2005 had their draw periods end and prepayment periods begin at the height of the great recession. The payment shift from an interest-only payment during the draw period to a fully amortized payment during the repay period was a significant financial burden for already cash-strapped borrowers and caused what some referred to as “a second wave” of loan defaults. Because of this, creditors shied away from offering them and consumers either weren’t interested in this type of loan or had little equity in which they could leverage.

The recovery has brought hope in many ways, for the residential lending market it has manifested itself in low unemployment, increasing home equity, and low inventory. This perfect storm of economic factors has provided an opportunity for the once vilified home equity loans. But unlike pre-recession HELOCs, many creditors are offering new features within these products, like fixed-rate options that are appealing to credit conscious consumers. And consumers, tired of the lack of opportunity to move up or down in their primary residence are turning back once again to these trusty loan products.

Opportunity awaits: HELOC prospects are back in the spotlight

In today’s market, HELOCs are making a comeback – in a big way. Skyrocketing housing prices and shrinking inventory levels are driving more homeowners to consider staying where they are and using the equity they’ve built up in their homes to fund current financial needs – including major expenses like financing home improvements, debt consolidation, or refinancing.

In the fourth quarter of 2018, more than 14.5 million American properties were equity-rich, meaning they carried secured loans of 50% or less of the homes’ estimated market value.(1) This, combined with other economic factors have created a significant opportunity for mortgage lenders in the HELOC space.

We recently partnered with Experian and Weiss Analytics to explore and outline the market drivers, customer profiles, and positioning needed to grow lenders’ HELOC business. Ellie Mae also conducted a consumer survey in Q4 of 2018, comparing the behaviors of HELOC customers to borrowers using other loan types.

All of these findings are now available to you in our new eBook, entitled The HELOC Opportunity: The Drivers, the Market and How to Capitalize on this Growing Trend, which offers insights on how to:

  • Understand borrower selection, decision-making, and lender expectation factors
  • Identify and educate potential customers on the benefits of a HELOC
  • Offer the right mix of products to make the process fast and easy
  • Integrate effective online and mobile touchpoints
  • Optimize human interaction to ensure the best possible customer experience
  • Utilize HELOC support within the Encompass® Digital Lending Platform to make originations more efficient

Comments from lenders who are currently originating HELOCs

“Transitioning our HELOC business from a separate consumer lending platform into Encompass has helped us reduce turn times by one week because we’re no longer doing double data entry. This has helped us significantly improve our borrower experience because we can close even faster.” 

- Angela Mazura, AVP, Merchants Bank of Indiana

Looking for a partner to help you increase your HELOC lending ROI?

At Ellie Mae, we are committed to helping our customers succeed with technology solutions that boost origination volume while reducing the cost of origination, support consumer engagement, and drive success with a true digital mortgage. Our recent Encompass Digital Lending Platform 19.3 release delivers new enhancements to our end-to-end HELOC lending solution that help lenders simplify and automate every aspect of their HELOC workflow, ensure quality and compliance, and deliver better customer experiences all at the same time.  Discover how Ellie Mae can partner with and help you acquire more HELOC customers, originate and sell HELOCs, and drive greater efficiency at a higher ROI.


Learn more about HELOC lending.


 1. Equity Rich U.S. Properties Increase to New High in 2018. February 5, 2019. ATTOM Data Solutions.