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Home Equity Loans Represent Huge Opportunity For Credit Unions

As the COVID-19 pandemic creates financial hardships for millions of Americans, home equity loan products represent an amazing opportunity for credit unions to grow their business and help their members during a difficult time, said Jerry Schiano, CEO of Spring EQ, a leading nationwide second mortgage lender.  

Home-equity loans can also help credit unions recover from lost business due to plummeting auto sales, since auto financing is a common source of revenue for credit unions, Schiano explained. According to Standard & Poor’s, U.S. auto sales in March plunged to their lowest level in almost a decade, as car showrooms across the county have closed to prevent the COVID-19 coronavirus from spreading.  

Spring EQ is a nationwide second-mortgage lender that uses technology to change the way consumers access their home equity. Spring EQ partners with credit unions through the company’s white label affinity program to help them provide home equity loan products to their members more quickly and easily, enabling homeowners to borrow up to 90 percent of their home’s equity. The company’s technology-driven processes enable borrowers to qualify instantly and receive cash in as little as 11 days.  

In addition, Spring EQ is looking for credit unions who would like to partner, and purchase fully underwritten, closed and funded home equity loans that fit their credit criteria, on a monthly and ongoing basis. The benefit of increasing their portfolio with high-yielding assets, secured by real estate, without incurring the expensive manufacturing costs related to originating home equity loans today. These loans would also include agreed upon representations and warranties to protect our credit union partners.  

“Our world has changed dramatically over the past five months, and millions of Americans need financial help now,” Schiano said. “For many homeowners, their best option for accessing cash immediately lies in their home equity. Credit unions are in an ideal position to help their members take advantage of historically low interest rates and access the cash they need today to help them through this difficult time.”  

The loss of earnings through auto financing has hit many financial institutions hard, especially credit unions, which are typically a favored option among consumers looking to finance a vehicle. According to the Credit Union National Association’s (CUNA) Monthly Credit Union Estimates released earlier this month, the average loan-to-share ratio has already fallen from 82.12 percent to 81.65 percent between February and March of this year.  

Increasing uncertainty about the economy is expected to result in a reduction in credit union earnings through loans for the remainder of this year. However, low interest rates are expected to stimulate mortgage lending and home equity lending, in particular, as more consumers look to their home equity to help them meet short-term and emergency financial needs.  

“With the nationwide decline in auto sales, credit union leaders seeking a new stream of loan assets would be wise to partner with a lender that specializes in home equity loans and can make the process fast and easy for their members,” Schiano said. “By offering home equity loans through Spring EQ, credit unions can not only strengthen their brand among consumers as a trusted financial partner while improving their earnings during this challenging time.”  

“Embracing home equity loans can also provide credit unions with a competitive advantage in the mortgage marketplace,” Schiano added. According to the Mortgage Bankers Association, mortgage credit availability decreased 16 percent in March to the lowest level in over five years, as several banks and lenders have suspended home equity lending during the current financial crisis.  

Unlike a traditional mortgage, Spring EQ’s process and products enable homeowners to dramatically reduce the time and cost it takes to access their home’s equity. Most borrowers only need to show their ID, proof of income, proof of home insurance, and their first mortgage statement to get approved. Typically, no interior appraisal is required, and most approved borrowers receive funds within three weeks.  

As CEO of Spring EQ, Schiano brings over 30 years of entrepreneurial experience to the mortgage industry, including founding and successfully leading multiple lending organizations. Prior to starting Spring EQ, Schiano founded New Penn Financial and grew the company into a top 30 mortgage lender with over 1,400 offices and 1,800 employees nationwide.