U.S. RMBS Frontline Perspectives: A Guide to Modern Home Equity Securitizations

This commentary highlights the key features of home equity loans and home equity lines of credit (HELs/HELOCs), their risks relative to traditional mortgage loans, and a number of key aspects of today's HEL/HELOC securitization market.

“In recent years, the number of [HEL/HELOC] lending institutions and volumes, including nonbank financial offerings, began to expand with rising property values,” said U.S. RMBS DBRS Morningstar analysts. “There are growth opportunities for HELs/HELOCs versus first-lien cash-out refinances given much of today's mortgage borrower population is locked in to historically very low fixed-rate first mortgages, current market rates are much higher this year, and home equity values have risen substantially over the past three years.”