What makes EquitySelect the ideal HELOC for seniors?
The loan has a term of 40 years and requires borrowers to draw down at least 50% of the line of credit – or $75,000, whichever is greater – over a seven-year draw period. There is no rescheduling of payments during the term of the loan.
CEO and President David Peskin – who previously held leadership roles at Senior Loan Network And Reverse Mortgage Financing (RMF) before purchasing a stake in HTL in early 2024 – helped design the product.
“People want to make payments like they would with a credit card, but there are no products that are really custom designed for older homeowners to access home equity and make a payment that is comfortable for them,” Peskin said in an interview with HousingWire‘s Reverse Mortgage Daily.
“This product allows them to make home improvements, pay off debt, help grandchildren or whatever they want. With taxes and insurance increasing, it helps cover that too. It’s a piece of the puzzle that was missing for us.”
Digging into acceptance
EquitySelect targets retirees or soon-to-be retirees who want to manage cash flow and continue living in their home without resorting to high-interest credit cards or HELOCs with shorter-term interest rates only. It can also benefit borrowers who have difficulty qualifying for bank financing due to higher debt-to-income ratios.
“If you have a good asset that you can put a lien on, you worry less about cash flows. Obviously you want cash flows, so we designed the loan based on the borrower’s age and life expectancy,” Peskin explains.
“The longer you expect to live, the lower the loan-to-value will be, if you make that minimum payment over the full term of the loan. And the older you are, the higher the loan-to-value.”
This is not a ready-made product. It is tailored to the income, home equity and age of each borrower. A full assessment is needed, which could take weeks. The company currently offers the loan primarily through its wholesale channel and is also exploring partnerships with smaller banks and credit unions.
EquitySelect is currently available in Arizona, California, Colorado, Florida, New Jersey, Oregon and Utah, with six or seven additional states expected by the end of 2025. A second retention version will be released in January, aimed at homeowners who want to keep their low-interest first mortgage intact.
Burgeoning potential
HTL sees significant opportunity for the aging population – a segment with an estimated $14.4 trillion in home equity that is also combating rising costs of living, from healthcare to insurance and repairs. Borrowers use the HELOC primarily for debt consolidation, home improvements, and additional cash flow to cover housing and medical costs.
“There are more than 40 million older homeowners, but there are so few products that are truly designed to help people age,” Peskin said.
Production to date is “several million,” but the goal is to scale to well over $100 million per month. “We think the market is in the billions annually,” he added.
The product is funded through both HTL’s balance sheet and institutional investors – support was delayed until the technology and regulatory infrastructure was in place, according to Peskin. “It took us two years to develop the product, both from a legal perspective and from the technology and the way we had to deliver it,” he said.
Looking ahead, HTL plans to work with financial advisors and insurance agents who want to help seniors finance their long-term care needs.
