Home Equity Lending is Surging and So Are the Risks: How Lenders Can Compete 

After years of subdued activity, home equity lending is surging again. Homeowners are sitting on record levels of tappable equity – over $11 trillion, according to recent industry reports – and mortgage rates remain far higher than pre-pandemic levels. Instead of refinancing their low-rate mortgages, borrowers are turning to home equity loans and HELOCs to access liquidity for renovations, debt consolidation, or cash flow needs. 

Fintechs and large banks are transforming the landscape. Fintechs like SoFi and Figure have leveraged automation and alternative credit modeling to approve more borrowers quickly, with SoFi reporting nearly $800 million in home equity originations in a single quarter. 
Major institutions like JPMorgan Chase and Citi have reentered the market with hybrid products that merge traditional underwriting with fintech-style flexibility, such as mandatory drawdowns and fixed-rate conversions. 
These innovations are raising borrower expectations for speed and flexibility, forcing traditional lenders to adapt. 

Lenders must balance competitive agility with risk management. Expanding credit parameters (such as CLTV, DTI, and credit score thresholds) can bring in new business, but it also increases exposure. Meanwhile, regulatory capital requirements and balance-sheet constraints limit how much risk most lenders can safely absorb.  
In short: lenders want to serve more qualified borrowers, but they can’t do it at the expense of their portfolio’s stability. 

Risk transfer. HUB Financial Services’ Home Equity Protection Program (EPP) allows lenders to expand lending eligibility while transferring a portion of risk off the balance sheet. It gives institutions the flexibility to approve more loans without compromising credit quality or profitability. 

EPP can be applied to a variety of home equity loan types, including:
 
-Home Equity Lines of Credit (HELOCs) 
-Closed-end second mortgages 
-Secured & Unsecured Home improvement loans 
-Piggyback Purchase-money seconds 

This flexibility makes it ideal for financial institutions diversifying their loan portfolios or reentering the home equity market. 

EPP is a fully insured portfolio program backed by AM Best-rated carriers. 
If a covered loan defaults, HUB’s streamlined claims process allows lenders to recover losses up to 100% of the outstanding balance, often eliminating the need for foreclosure or REO management. This protects lenders’ portfolios while reducing administrative burden and loss reserves. 

Not at all. This insured program is fully delegated up to $250K with each insured lender having custom-tailored parameters that comes with no implementation fees, no monthly minimums, and no cost to the institution. Premiums are built into loan pricing, so lenders maintain full control over usage and program scope. HUB’s team manages setup and training to ensure a smooth rollout.
  
Since this is a delegated program, there are no barriers to entry, meaning no MSA or SOW to negotiate. Simple to implement as lenders simply expand their internal loan underwriting guidelines and report monthly on insured loans from a billing perspective.  

By integrating EPP, lenders can:
 
-Expand borrower eligibility without increasing balance sheet risk 
-Protect portfolio health through insured loss coverage 
-Eliminate foreclosure and REO expenses  
-Reduce reserve requirements 
-Retain competitive agility as market conditions shift

Ultimately, EPP turns growth into a strategic advantage rather than a balancing act. 

We combine deep subject matter expertise with a highly custom hands-on approach to implementation. The EPP is just one part of a broader suite of solutions designed to help lenders scale efficiently and safeguard performance in a changing market. In a home equity environment where competition is accelerating and risk tolerance is tightening; we help lenders grow confidently.