New home construction is at historic lows. Homeowners are hesitant to sell because of higher interest rates. As a result, the U.S. mortgage market is seeing a big increase in demand for HELOCs (Home Equity Lines of Credit). This shift isn’t just a passing trend; it signals a fundamental change in how people access and use equity.
According to a recent MBA NewsLink article, nearly 30% of homeowners are considering tapping into their home equity. For mortgage risk professionals, this means due diligence must go beyond traditional first-lien origination. It should also include new equity lines, which often have higher exposure and more complex risks.
As a national leader in Mortgage Risk Mitigation, Frasco® offers deep expertise and solutions to help mortgage lenders navigate this rising tide with confidence and clarity.
Why HELOC Demand is Growing in a Low-Supply Market
- Housing Inventory is Tight
Limited new construction has reduced housing turnover. Homeowners with historically low fixed rates are opting to stay, not sell.
- HELOCs as Financial Tools
Homeowners are turning to HELOCs to fund:
- Renovations and home upgrades
- Medical expenses and education
- Debt consolidation
This demand introduces new risks for underwriting teams, especially when borrowers overstate equity or misrepresent their intentions.
Frasco’s Mortgage Risk: Built for Today’s HELOC Demand
As HELOC usage grows, mortgage fraud risks also rise—particularly regarding:
- Occupancy misrepresentation
- Fraudulent employment/income data
- Straw buyer activity
- Undisclosed debts
Frasco’s Mortgage Risk Mitigation Services are strategically designed to address these areas with:
Forensic & Fraud Reviews:
We investigate misrepresentations, falsified documentation, and identity fraud through borrower interviews and document audits.
Employment & Income Investigations
Our team checks self-employment claims, small business legitimacy, and income consistency. We use public records and site visits for this.
Occupancy Investigations
Frasco conducts both desktop and field-based occupancy verification, including video verifications and social media audits, to determine if properties are truly owner-occupied.
Source of Funds & Asset Verifications
We check deposits, income sources, and down payment origins again. This helps ensure lenders are not surprised by hidden debts or false claims of available cash.
Identity Theft Reviews
With digital lending on the rise, we help check if identity theft claims are real. We also trace the true borrower or fraudster when needed.
How Mortgage Risk Professionals Can Adapt with Frasco
In this changing environment, proactive mortgage teams are:
- Implementing real-time verification workflows pre-funding and post-close
- Integrating third-party reviews on income, employment, and occupancy
- Using social media and public records to detect borrower inconsistencies
- Outsourcing fraud detection to experts like Frasco for objective investigations
Our customizable reports make sure your compliance team, investors, and regulators get the data they need on time.
FAQs About HELOC Demand and Risk
1. Why are HELOCs riskier than first-lien loans?
They often involve higher CLTVs, variable rates, and weaker documentation—making them more vulnerable to default or misrepresentation.
2. What misrepresentations are most common in HELOCs?
Borrowers may falsely claim occupancy, inflate income, or conceal other debts.
3. How can Frasco assist during the pre-funding process?
We verify income, assets, employment, occupancy, and document authenticity—ensuring a clean portfolio from day one.
4. What post-close services does Frasco offer?
We handle forensic audits, borrower interviews, and re-verifications to prevent buybacks and reduce investor disputes.
5. Are your services scalable for large lenders?
Yes, our team manages both bulk and case-by-case investigations with flexible turnaround options.
Conclusion: Why You Need Proactive HELOC Risk Mitigation Today
With HELOC demand rising due to low home construction, mortgage lenders and servicers must adjust their risk strategies quickly. Frasco empowers mortgage professionals with targeted investigations, real-time verifications, and fraud prevention tools that ensure your HELOC portfolio stays clean, compliant, and performing.
Don’t wait until HELOC defaults become headlines. Partner with Frasco today to build a secure lending environment.
Contact Us Today
Frasco® Mortgage Risk Mitigation delivers ethical and efficient solutions tailored to your needs. Have questions or want to discuss your investigative needs further? Schedule a call with one of our experts today to find the answers you’re looking for.
Disclaimer: This blog post is for informational purposes only and should not be considered legal advice. Please consult your general counsel for specific legal guidance. Frasco investigators are licensed, and our operations comply with US industry, federal, state, and local laws.