loanDepot, LLC, plans to offer new home equity products. loanDepot is the first marketplace lender to offer American consumers a choice of credit products through purchase and refinance home loans, unsecured personal loans, and now home equity loans on one convenient tech-enabled lending platform.
This announcement comes just two months after loanDepot’s launch of personal loans. loanDepot personal loans have rapidly gained market acceptance, with funding volume in the first two months of launch reaching more than $40 million. Overall funding volume across the entire loanDepot platform in the first half of 2015 reached $14.3 billion, an increase of 165 percent compared to the first half of 2014, rising from $5.4 billion.
“This is a substantial step forward for consumers and marketplace lending after the financial crisis. The delivery of a home equity product immediately following the launch of our personal loan product confirms the agility and scalability of our tech-enabled lending platform,” said Anthony Hsieh, chief executive officer and chairman of loanDepot, LLC. “It reaffirms our commitment of ushering in the next generation of lending that will empower borrowers and investors to connect through multiple products on our platform. Our vision is to deliver a diversified lending model sustainable in all market conditions. We look forward to leading the development of marketplace lending through the introduction of new products and services that provide credit solutions for borrowers with attractive returns for investors.”
Investor interest in loanDepot’s home equity and personal loans is strong, with multiple investors showing interest in both asset classes. Investors are attracted to the company’s innovative model that efficiently connects borrowers with loan products on a platform engineered with substantially higher compliance and license requirements, enabling the company to offer a larger product suite. loanDepot expects to continue adding investors that will help refine and deepen the home equity marketplace, as well as other home loan and personal loan products.
Building on loanDepot’s success of combining purpose-built technology and an efficient marketing platform with advanced predictive data science, the company will offer home equity products that include:
- Loan amounts ranging from $25,000 to $250,000 for cash-out financing or home purchase
- Up to 95 percent loan-to-value for certain borrowers and transactions
- Fixed terms up to 30 years
- No pre-payment penalties so borrowers can pay off principal anytime
“As the economy continues to improve and home prices have stabilized, there is a growing reservoir of equity to help borrowers capitalize on their options to manage their credit profiles,” said Brian Biglin, chief risk officer, loanDepot, LLC. “For example, consumers across the country who have legacy home equity products may experience payment shock this year as these loans reset. There are also tens of thousands of homeowners who took out higher-costing personal loans over the past few years who can use our home equity products to lower their effective borrowing costs and substantially decrease their monthly payment.”
Interest rates are expected to start in the six- to eight-percent range for qualified consumers which, when considering the tax deductible savings of mortgage interest payments, the net effective interest rate drops to below five percent for qualified borrowers. Loans can be used for many reasons including home improvements, debt consolidation, education, business loans and more. For purchase borrowers, by eliminating higher jumbo loan rates with loanDepot’s home equity product as a piggyback to a traditional home loan, borrowers keep loan amounts under current agency limits, take advantage of historically low interest rates, and decrease the down-payment required to purchase a home.
loanDepot will offer second mortgages to borrowers starting in September through the company’s 1400+ licensed loan officers who hold more than 7,000 state licenses.
Earlier this year, loanDepot announced plans to add approximately 1,000 additional employees. The company has doubled its office-space this year to nearly 1,000,000 square feet nationwide to support its bold growth and expansion. Today the company employs 4,000+ people.
About The Author
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at email@example.com.