Magazine article American Banker

Web Equity Lending Slow but Poised to Make a Run

Magazine article American Banker

Web Equity Lending Slow but Poised to Make a Run

Article excerpt

By focusing on what some would say is a futile quest to make first mortgages, dot-com lenders may be missing an opportunity in home equity.

More than half of the mortgage lending sites in Gomez Advisors' top 20 ranking offer home equity products, but only a handful prominently display their availability and several offer them only through partnerships with other institutions.

Internet lenders have built their business largely around mortgage origination and refinancing, both of which are vulnerable to rising interest rates. Home equity loans, which sell relatively well when rates rise, remain a side order on most Web menus.

"There's a much larger market for home equity loans than people realize," said Joseph A. Hausauer, chief executive officer of in Seattle. "But our observation so far is that home equity lending hasn't rushed on-line."

Scott Happ, president and chief executive officer of in Milwaukee, said home equity is a year to 18 months behind the first mortgage business on the Web.

"This whole area is still untapped, but especially the home equity business, which is embryonic," he said.

Lenders say home equity products' many advantages over other home loans include less vulnerability to rising interest rates, more convenience for consumers and lenders alike, and a higher frequency of transaction.

"You have a motivated consumer, a motivated bank, and an easier fulfillment process," said Doug Lebda, chief executive officer of LendingTree in Charlotte, N.C. "It's a product that's made for the Internet. …

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