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Mortgage Originations: The Good, The Bad, And the Ugly in 2014

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Th e M Rep o RT | 25 Feature long-term commitment to equity lending that predates the eco- nomic crisis, with the expertise and stability to offer a range of compliant solutions specific to equity lending. A major challenge lenders face is dealing with the end-of-draw period on home equity loans. Many home equity lines of credit are approaching the 10-year mark, and lenders are concerned about the impact of borrowers having to pay the significantly higher monthly payments as a result. Lenders certainly want to keep those borrowers in their homes without having to get another home equity loan from somebody else, and strategic relationships can help maintain that borrower connection. If the lender decides to make an option available to that borrower to help pay off the initial line of credit, the lender can offer a cash-out refinance through a centralized arrangement. Many lenders are opting to save that borrower relationship by offering more options to help from a title and settlement standpoint rather than settling for a traditional pay-back period on a home equity loan. factor #5 Coordinate a marketing plan to promote equity loans to target customers. B y using the customer data lenders already have in their databases, they can develop marketing plans by using the most salient aspects of the individual borrower's account and leverage that information to customize communications to reflect that borrower's unique circumstance. This not only provides more substantial value to the borrower, but effectively using the data can help lenders analyze the changing market conditions as it impacts that particular borrower's situation. Lenders who focus on market segmentation better understand their customers and, as a result, are able to provide better service to them. factor #6 Look into the loan origination dates for existing HELOC borrowers. O n any given day, certain borrowers will be closing in on their 10-year anniversary dates, when the line of credit shifts from interest-only to fully amortizing monthly payments. Some may want to refinance into new credit lines to restart the interest-only payment cycle. factor #7 Review results and make changes as needed. A s with every major initiative, it is imperative lenders constantly measure results after implementation so they know when and where to tweak and improve their home equity campaign, if necessary. Home equity loans are crucial to a healthier real estate market when used responsibly, as they enable homeowners to pay for repairs and improvements on their homes. Therefore, it makes sense to have a deliberate approach to home equity lending as the market re-emerges— an approach that benefits the investor and the borrower. Kevin Wall is president of Santa Ana, California-based First American Title Insurance Company's Mortgage Services division, a leading provider of origination and default servicing solutions and a primary source of national title insurance, settlement, and valuation services for residential originators and servicers. For more information, please visit www.famortgageservices.com.

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