BSI Financial expands home equity subservicing capabilities

A subservicer announced this week that it is expanding the operations it has available to handle one of the home equity products lenders have been more active in originating recently.

BSI Financial, which also subservices home-equity investment products, has turned to automation to handle draws, foreclosure tracking, investor reporting and compliance.

The development of specialized subservicing in this area has become increasingly important as expanded criteria HELOCs have been trending among nonbanks that were traditionally less involved in the line of credit business than their depository counterparts.

"HELOCs aren't a side business — they're an important portfolio driver for our clients," BSI Senior Vice President Allen Price said in a press release. "We recognized that traditional servicing approaches weren't meeting the unique demands of HELOC portfolios."

Specific functions BSI has automated in each of the aforementioned categories include:

• A "checkbook style" system for homeowners to make self-service draws on their lines
• Foreclosure tracking that includes early intervention
• Investor dashboards that measure portfolio performance and growth
• A compliance engine that tracks applicable state and federal regulations, including the Real Estate Settlement Procedures Act 
  

While HELOCs have been less compliance-sensitive than their traditional mortgage counterparts to the extent that they are open-ended loans that lie outside the ability-to-repay rule, they are subject to certain disclosure and cancellation requirements.

Lender involvement in HELOCs have grown recently due to what are generally high levels of accumulated home equity in the market, and also the fact that many mortgage borrowers have older first-lien products with lower rates they don't want to give up.

Consumers also may want to tap their home equity through what is typically a second-lien line of credit because they don't want to move and have to finance home repairs, or want to manage consumer debt levels that have been historically high recently.