Hightechlending And Better Partner To Expand Equityselect Heloc

HighTechLending announced Wednesday that it has partnered with Better to expand access to home equity lines of credit through its EquitySelect HELOC product, which will be offered through Better’s retail channel, NEO Home Loans.

HighTechLending said the partnership is aimed at helping homeowners tap into their home equity. It will target borrowers who may not qualify for traditional home equity loans despite having strong credit profiles and significant equity.

U.S. homeowners hold an estimated $35 trillion in home equity, according to the company. At the same time, about 26 million borrowers are locked into mortgage rates below 4%.

Others, including self-employed borrowers or those with variable incomes, often struggle to meet traditional underwriting standards. HighTechLending said these factors contribute to an estimated $240 billion in lost annual loan volume among homeowners ages 40 and older.

The company’s EquitySelect HELOC is designed to allow borrowers to access home equity without refinancing their primary mortgage, with a payment structure intended to offer more flexibility while maintaining equity-based underwriting standards.

“Life changes, incomes fluctuate, and financial needs evolve,” said David Peskin, president and CEO of HighTechLending. “Homeowners deserve options that reflect those realities. Through our partnership with NEO Home Loans powered by Better, we are expanding access to responsible home equity solutions for borrowers who have been declined under traditional guidelines but are otherwise strong, creditworthy homeowners.”

Based on a review of declined home equity applications from NEO Home Loans, HighTechLending estimates that as many as 20% of these applications could qualify under the EquitySelect HELOC structure.

In a conversation with HousingWire ahead of the announcement, Peskin said that the offering is designed to provide month-to-month “payment flexibility” for borrowers. A secondary goal is to serve a portion of borrowers who have inconsistent employment or a fixed income.

Peskin said that HighTechLending analyzed a portion of the loans that Better and NEO couldn’t fund due to debt-to-income (DTI) restraints. “And based on running that data through — obviously, it was just the basic data — but it showed that we were able to give close to 20% of those turndowns access to the equity in their home for the amount they were looking for.”

Peskin clarified that borrowers who use the product don’t have to pay a premium. He said that the “flexible” payments are possible because each loan is designed around the monthly payment the borrower wants to make. HighTechLending then calculates the loan amount to match that payment over the expected time the homeowner will stay in the house.

“Every customer is presented a unique offer,” he said. “The reason we can allow them to make just that cap payment is that we offer a lower LTV with the notion that they will make that payment for the full term.”

Unlike traditional HELOCs, which often require a full repayment after an interest-only period, Peskin said that the loans do not recast, allowing for predictable, stable payments over the life of the loan.

The product is expected to give borrowers another option for accessing capital for uses such as home improvements or debt consolidation.

“The problem is that old traditional underwriting guidelines cap you at 50% debt-to-income ratio,” Peskin said. “You could be offered a lower loan amount, but maybe that lower loan amount is not enough to pay off the debt that you were looking to pay off, or maybe it’s not enough to do the home improvements that you were looking to do.

“There is a good portion of borrowers who are looking to pay off debt or do home improvements. … A lot of people have really low rates, and they don’t want to touch them.”

Under the agreement, NEO Home Loans will offer the EquitySelect HELOC as part of its product lineup, while HighTechLending will purchase the loans originated through the program.