With housing values increasing, consumers are showing renewed interest in taking out a home equity loan or home equity line of credit (HELOC). New mortgage originations are still lagging somewhat, so home equity marketing is a huge opportunity for lenders.
Improving methods of evaluation
There are many tools available to help lenders in their marketing efforts, but not all tools are necessarily complete solutions. Here are some best practices to look for when evaluating marketing and acquisition tools.
Comprehensive customer data
- Customer data from acquisition tools should include not only the standard information on income, employment, assets and liabilities, but specific data on the current mortgage. Data on the amount, balance and payment of the current mortgage is critical, as is data on current and worst payment statuses. Any payment data pertaining to an already existing home equity loan or line of credit should also be considered.
- Choose a method that considers multiple dimensions of property data. AVM values are a must, as are public record lien data and information on the assessment of the property. Market data, including average days on the market, REO rates and total inventory is also important, as is listing data.
Prioritization is key
- Make sure that you are able to include those factors that are important to you and that you can prioritize them as you see fit. Lenders in different parts of the country are very likely to have different priorities. Just as often, though, two lenders in the same city will base their decisions on different factors since each lender’s Ability to Repay Policy may vary. Make sure that the tool you choose allows you, not the data provider, to determine what is most important.
- Also, make sure that your risk tolerance is factored in. Some lenders are willing and able to take on more risk than others. This is a very important consideration for you as a lender, so make sure that the solution you select allows you to specify the level of risk you are willing to accept.
Marketing and credit offers
- Find a source for data that you can use for both general marketing campaigns and firm offers of credit. Due to FCRA compliance issues, you will likely need to use two different products, but as long as they come from the same provider you won’t have to learn two different systems and can take advantage of available synergies.
Identifying the right tools to market a home equity loan or line of credit will open up new opportunities for lenders, which will only increase as the housing market continues to improve.