Streamlining Home Equity Loan Process Using Technology


Regardless of the state of the market, it is always a good time for credit unions to broaden their offer to include home equity loans in order to create a balanced portfolio of different types of loans. The lack of housing stock and high market house prices have driven home sales down, making home equity loans even more attractive to homeowners.

Credit unions can tap into this market of homeowners looking to Option B to get the home they want – a home equity loan for renovations. The key to making credit unions successful is to use technology to streamline the process.

Many lenders who offer mortgage loans, including credit unions, have used the compliance and first loan process for their non-compliant business, which includes home equity loans. They used this method which results in unnecessary steps in the process as it is the only way they know how to process loans. The addition of the home equity line of business requires a credit union to invest in a new loan origination system.

The reality is that there is no solid reason for a member to have to wait 45 days for a home equity line because of the added time for a full appraisal and full title insurance policy. And for credit unions that offer home equity loans for eight to ten weeks, they should think about how to give their members a loan in less than a week.

Credit unions can save time by using a platform that offers the essential services needed to complete a home equity loan with an automated appraisal model instead of an appraisal, which NCUA says can be used. for loans up to $ 400,000.

Embracing technology, understanding local lending requirements, and applying their individual risk tolerance is how any credit union can be successful in this profitable market. By taking advantage of the technology and services available, credit unions can improve and update long-standing procedures and optimize their operations.

A better process for everyone

Stronger member engagement is on the minds of all leaders and is a popular topic for all financial institutions lately – and rightly so. When a credit union enters the home equity lending industry, it is important that they have a system in place to ensure that the member experience is positive. It is important to remember that on the other side of the borrower in the loan process is the loan officer, and the member will not have a positive experience if the loan officer does not have the necessary skills. great tools to help make the loan a reality. Basically, if the loan officer’s experience is junk, then the member’s experience will be junk.

There are systems and platforms that can make the process of getting an equity loan or refinancing as easy as creating a car or personal loan. Having the right tools in place will help loan officers feel empowered to make more home equity loans and better position the credit union for success.

Credit unions can improve the home equity lending process by understanding loan guidelines, regulations and requirements. It is essential to designate a team to gather this knowledge and avoid any unforeseen problems. Using this information to create an automated process around these guidelines that incorporates integrated solutions, credit report requests, employment verification, and more is the next step. And the last step is to run.

This is a market with increasing competition, not only from other financial institutions but also from fintechs that offer direct services to members. And while members of credit unions usually look to their trusted credit union for better interest rates, they stay loyal because of a great experience like closing on time. Unfortunately, this is where these new fintechs get ahead of the credit unions. They can respond quickly to requests from members.

Using automated and intelligent workflows can keep the process on track and cut the time it takes credit unions to process home equity loans by 60%. This means leveraging available technology that dramatically reduces manual data entry and errors, allowing loan officers to exceed member expectations by delivering the personalized experience and speed they want.

Creating a better lending experience isn’t all about technology; it also depends on an openness to innovative ideas and inventive approaches. Staying willing to consider new perspectives and concepts benefits both lenders looking to add home equity to their product line and those currently offering it. When a lender adds home equity loans to their list and uses technology to streamline back office processes, the resulting benefits will only be eclipsed by a growing portfolio and improved borrower experience.

Allen Jingst

Allen Jingst Director of Revenue LenderClose West Des Moines, Iowa


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