Home Equity Loan Lowdown

PNC in deal with First Horizon to process its home equity loans

Pittsburgh-based PNC Financial Services Group Inc. has reached an agreement with First Horizon Corp. to process First Horizon’s home equity loans and lines of credit that originate from online inquiries.

PNC Financial Services Group Inc. will process the applications and create loan documentation packages and coordinate loan closing, while First Horizon Corp. will market the home equity products via the company’s website and internet advertising or use an online application at a site managed by PNC. According to the agreement, all loans will be closed in First Horizon’s name and will be underwritten to First Horizon’s credit policy.

Growth in number of home equity loans in Finland continues

According to the Bank of Finland, the number of home equity loans in Finland continued to rise in the month of October. The loans stock of households grew in October by 16.8%, as rapidly as it did in September.

The average interest rate for new home equity loans rose marginally to 2.99% in October as against 2.92% in September, even while it continued to remain below 3%.

GE Money to invest Rs 450 m in India; launches first ever TV commercial

GE Money is expanding its branch presence in India and is targeting to reach over 200 branches in 2006 with an investment of Rs 450 m. The company has also launched its first ever television commercial in India.
The TV commercial is for GE Money personal loans and features children to demonstrate simplicity, ease and innovation, with the core message being that GE Money is a 'can-do' brand that has the ability to say ‘Yes’ to people in need, even when others are saying ‘No.’
Sunil Kapoor, vice president, personal loan, GE Money India said, “GE Money has a personal loan product for everyone, affluent, middle and mass segments. We have innovative products designed to meet varying needs as well as special product surrogate programs for self-employed individuals. This first-ever TV commercial by GE Money in India reflects our commitment to make it simpler for people to fund their aspirations.”
GE Money is the new name for GE Countrywide. Since September 2005, all existing GE Countrywide products, which include Auto loans  (New & Used Cars), Consumer Durable Loans, Two Wheeler Loans, Personal Loans and Home Equity Loans against Property, have been consolidated under the GE Money umbrella brand.

Home equity loans at a glance

For someone who wants to borrow a relatively large amount of money but does not have good credit, home equity loans seem like the most attractive deal. Home equity loan is a loan granted based on the ‘equity’ a homeowner has built into his owned house, i.e., the excess of the market value of the house over the loans already taken. In other words, home equity loans allow a homeowner to borrow money by pledging the house as security. Typically, the home equity lender takes a secondary charge over the house if already mortgaged to a primary lender.
Home equity loans are particularly attractive to most borrowers since they usually have a lower interest rate and are easier to qualify for if you have bad credit. Payments on a home equity loan may be tax deductible, even as borrowers can get relatively large loans.
Home equity loans are considered relatively safe for lenders, considering how a borrower cannot disappear with his house or hide it if he defaults on his loan. As a result, lenders can also be more liberal since there’s a good chance of collecting the collateral because a borrower will most likely make his payments a priority once his home is on the line.
Borrowers use home equity loans for some of life’s larger expenses since homes have a lot of value to borrow against. These loans are usually used to remodel or renovate the house, pay for a family member’s college education, finance the purchase of a second home or even to consolidate other high-interest debts.
Home equity loans may sound like the perfect answer to many of your problems but one cannot ignore risks that borrowers face of losing their homes if they fail to make their payments on time. Homeowners also face the risk of losing their most valuable asset, their homes, if they do not make sure that a deal is legitimate when taking a home equity loan.

Shearson Home Loans secures $4 m equity commitment

Shearson Home Loans, a fast growing mortgage banker/broker and subsidiary of Consumer Direct of America, has executed a $4 m equity commitment term sheet from Crusader SEDA Fund LLC in New York. The SEDA, or Standby Equity Distribution Agreement, allows Shearson to draw down capital from the fund periodically over the next two years up to a total of $4 m. The expected closing date of the agreement is scheduled for December 16.

Michael A. Barron, Chairman & CEO, Shearson Home Loans said in a company release, "We are pleased with our existing relationship with Crusader and this equity commitment will allow us to expand the Shearson brand and add numerous new branches to our mortgage network. We have several acquisitions in mind and a financial resource like this gives us a real market edge as we consolidate branches."

HSBC launches special offers on home loans

With everyone in the holiday mood, HSBC has found it the perfect time to offer special deals on its home loans, flexicredit loans and credit cards.

HSBC will not be charging any processing fees and will also defer the first three months' repayments for those taking out a new home loan or flexicredit loan between now and January 31st. The HSBC home loans offer also includes maxicredit loans. A new credit card customer, on the other hand, will not have to pay any bank fees for the first year.

HSBC's Chief Executive Officer, Mr Shaun Wallis told online service di-ve,

"Over the next two months, HSBC is offering a number of Christmas discounts on various products, giving our customers the opportunity to make that 'longed-for' purchase this Christmas and during the January sales."

Read online service di-ve's report

UK govt, lenders in agreement to offer subsidised home equity loans

The UK government now claims it can help an additional 20,000 people into home ownership. This comes after UK Chancellor Gordon Brown confirmed that an agreement has been reached with three of Britain’s biggest mortgage lenders to provide subsidised mortgages to first time buyers. According to this agreement, buyers will take out a mortgage for 75 per cent of a property's value and the government and the lenders would provide an interest-free loan for 25 per cent.

The three lenders, HBOS, which includes the Halifax, the Nationwide and Yorkshire building society, have signed up to the scheme, which is known as ‘Open Market HomeBuy’. The open market HomeBuy equity loans scheme is set to run on a pilot basis in October next year.

The scheme would be open to key public sector workers, social tenants, those on the housing register and other first-time buyers identified as priority cases by regional housing boards. However, details of exactly how it will operate, and the precise eligibility criteria, are still being worked out.

Britain’s Housing Minister, Yvette Cooper, said,

“There are plenty of families who want the chance of home ownership and have the steady income to support it, but cannot keep up with rising house prices. That's why it is so important to promote more shared equity schemes to give them a chance to get their first foot on the housing ladder.”

Read a UK Telegraph report

Poland to mull curbs on forex home loans

Polish banking authorities are set to consider measures to curb the risk posed by foreign currency home loans to consumers and banks. Forex loans, mainly Swiss francs, are the most popular mortgages in Poland, with interest rates as low as 2 per cent; they make up nearly two-thirds of total mortgage lending.

Despite the obvious concerns that authorities feel about the threat from forex lending, they, nonetheless, rejected a proposal made by the country’s leading bank association, the Polish Banking Association (ZBP) to impose a ban on forex home loans.

A statement from the Central Bank, which overseas the banking inspectorate said,

“After analyzing all possibilities, banking regulators will propose further actions…possible solutions include limits for foreign-currency lending in proportion to a bank’s capital or total assets.”

Read more about National Bank of Poland and Polish Banking Association