First Guaranty’s non-QM unit launches closed-end house fairness mortgage

First Guaranty Mortgage Corp. on Thursday introduced the launch of a brand new fixed-rate second-lien product to its distributed retail, shopper direct and mortgage dealer mortgage channels.

The firm had began experimenting with an identical house fairness product that may be used as a part of a piggyback mortgage earlier than the pandemic disrupted the market, and it’s bringing it again as a standalone product for now. Piggybacks permit second-lien loans to function a substitute for mortgage insurance coverage that debtors might get if they’ve lower than the required down cost.

The introduction of the brand new second-lien is in keeping with renewed curiosity in standalone traces of credit score and different house fairness merchandise since debtors have turn out to be reluctant to refinance current first liens with charges rising. The closed-end second lien additionally lets debtors lock in house fairness charges earlier than they rise greater.

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“This new offering gives individuals an affordable alternative to tap into their home’s equity. As the market fluctuates, borrowers can gain peace of mind with a fixed rate,” mentioned Paul Jones, senior vice chairman, non-QM improvement and manufacturing, in a press launch.

The second-lien mortgage can have a ten, 15, 20 or 30-year time period. The 680-minimum credit score rating and mixed loan-to-value ratio restrict of 100% are supposed to mitigate the home-equity efficiency dangers that emerged in a previous housing crash. 

Non-qualified mortgages made to atypical debtors, standard first-liens, and financing on trip properties will be mixed with the brand new seconds, however the house fairness product can’t be used at the side of government-insured loans.

In distinction to another lenders which were providing house fairness traces of credit score, First Guaranty Mortgage is barely providing a closed-end product to this point in keeping with what’s extra generally provided at nonbanks.

While the corporate isn’t at present providing HELOCs, it’s positioning itself to be open to additional product modifications because the market shifts, and is contemplating bringing again piggyback loans.

“The needs of borrowers today can change quickly as the market fluctuates and we must be nimble and ready to adapt to it,” Jones mentioned.