Why Outsourcing HELOC Monitoring is an Important Lender Service

September 20, 2016

Compliance Lender Services Real Estate Tax Monitoring Outsourcing

As we’ve discussed the last several weeks, HELOCs are an important lender service that are only going to become more popular in the coming years. While they may have had a rough past due to the Great Recession and floundering housing market of the late 2000s, they have made a major comeback and we expect this to continue.

The last two weeks we discussed what HELOCs are, what the typical HELOC customer looks like, and some of the challenges lenders face regarding HELOCs, all of which have set us up for today’s topic: why outsourcing HELOCs is an important service for both banks and credit unions. We are going to take a closer look at the benefits of outsourcing HELOC monitoring, as well as what some of the top factors to consider are when outsourcing HELOC tracking.

Why Do We Need to Monitor HELOCs?

When used how they are intended to be, HELOCs can be drawn from over a period of time and paid down in a strategic and attainable manner. These lines of credit are ideal for people who need to take care of a few major home improvements or pay an unexpected large expense. With this in mind, it is absolutely imperative that HELOCs are properly tracked in order to avoid problems for both the borrower and the lender.

From the lender’s perspective, it is crucial that HELOCs are properly monitored to ensure all taxes are paid on time. HELOCs can be tricky, and when they go unmonitored, the risk levels of the line of credit can increase dramatically. Furthermore, unmonitored HELOCs can create a major headache - and a lot of extra work - for the lender, as it could result in the borrower becoming delinquent on their taxes. In the event a borrower is not making HELOC payments, it could put them at risk of losing their home, which means the lender may never recoup their funds.

Factors to Consider When Outsourcing

Tracking HELOCs is a critical lender service that many have started outsourcing, and for good reason. A high-quality vendor will be able to provide lenders with peace of mind that their HELOCs are being properly monitored, and therefore their borrowers are making payments on time. A good vendor will provide transparency for tax delinquency, which is an incredibly important service. Here are a few additional factors to consider when looking into outsourcing this critical lender service:

  • A vendor will provide information on any changes made to the loan portfolio
  • A vendor will offer transparency for tax delinquency
  • A vendor will provide insight into any potential problem areas
  • A vendor will provide information that will help lenders better understand their HELOCs

These are just a few factors to keep in mind when considering outsourcing HELOC monitoring. To learn more about why this is such an essential lender service, please download our latest ebook, Why You Should Consider Tracking HELOCs.

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