One large credit union on Long Island is finding that its members have both demand and ability to take out home equity loans and lines of credit.
Chuck Price, lending manager for the 150,000-member, $1.5 billion NEFCU in Westbury, N.Y., said he believes property values in his area have largely settled down, which has helped the CU to consider rebuilding its home equity business.
“We only lend in New York and we think that property prices here have bottomed out,” Price said, adding that NEFCU found a significant number of its members have home equity that they would like to start using.
“Some of them have been paying on their mortgage for years and have never opened a home equity account before,” Price said. “Others didn't see their property values drop as much as they thought they had.”
Price added that lower documentation requirements for home equity loans and a more difficult process to refinance mortgages had combined to help make home equity loans more popular than mortgage refinancing.
For example, he noted that NEFCU uses an automated appraisal system backed up with tax records to help underwrite the home equity loan whereas refinanced mortgage loans have to conform to the more stringent standards.
Price also noted that most of the home equity loans have been home equity lines of credit.