Homeownership is at an all-time high in the United States, making home-equity loans and home-equity lines of credit (HELOCs) an attractive resource for borrowers looking to leverage their equity and gain tax advantages.
Yet most home-equity loans and HELOCs are still serviced on a consumer servicing system.
While most home-equity loans involve middle- to upper-income borrowers, the low-end market and its tantalizingly high interest rates have attracted the attention of financial institutions from Citibank to Security Pacific to the former Bank of New England.
Home-equity loans are traditionally repaid according to a fixed-payment schedule, but in more recent years they have also been offered as a line of credit, adding to their appeal as a flexible-financing option.
Initially, these line-of-credit home-equity loans work much like a credit card with your house as collateral for the loan.