FirstClose Blog

The mortgage industry had talked about paperless, digital mortgages for years, and then in 2016 something startling happened. One of the nation’s largest mortgage banks bought advertising during the Super Bowl to tell the world it was easy to get a mortgage: all you had to do was “Push Button, Get Mortgage.” That push of a button was what started our industry’s version of the Space Race.

Over the next several years, mortgage lenders across the country scrambled to modernize their tech stacks. From independent mortgage banks (IMBs) to large depositories to credit unions the rush to create borrower-friendly point-of-sale (POS) systems was on. Why? Because borrowers were no longer comparing rates and terms alone—they were comparing experiences.

Fierce Competition Might Have Sparked the Race, But Strategy Wins It

The original surge in tech investment wasn’t driven by foresight—it was driven by fierce competition among lenders and the fear of losing borrowers to better tech-enabled competitors. This same urgency is evident today as large mortgage banks set their sights on home equity assets and relationships.

The company that bought the Superbowl ad nine years ago is already the largest originator of closed-end seconds, and it has only been originating them for less than a year.

If that wasn’t enough to spook the market, the same company has recently announced plans to buy one of the country’s largest mortgage servicers, and one of the top tech-enabled real estate companies. This would create a real estate loan servicing ecosystem with a combined servicing book of $2.1 trillion across nearly 10 million clients, representing one in every six mortgages in America.

Is it déjà vu all over again for our industry? Is it time for home equity lenders to ask the question: how will we compete going forward? How can we up our game to keep our clients?

A New Era of Mortgage Competition

In order to stay competitive, digital transformation isn’t optional. It’s urgent. And the need to modernize is a priority for every segment of the lending ecosystem—including larger banks and credit unions—and especially for home equity lending. The good news? Lenders don’t need a Super Bowl budget to deliver a world-class borrower experience. Technology-enabled solutions, such as what FirstClose offers, level the playing field by offering a faster, cheaper and more seamless digital lending process—particularly in the booming market for closed-end seconds.

Closed-End Seconds: Where the Space Race Is Heating Up

Closed-end seconds are a significant segment of the mortgage lending landscape. As of 2023, according to HMDA data, second liens, by loan count—including both closed-end seconds (CES) and home equity lines of credit (HELOCs)—comprised 23.7% of the market, slightly above the 22.6% peak during the housing boom preceding the 2008 financial crisis. As U.S. homeowners’ see robust equity balances, and millions of mortgage holders remain “rate locked” with historically low interest rates, home equity lending is an attractive option for many. The ultra-low first mortgage rates are pushing borrowers to turn to second liens in order to tap their equity rather than refinancing. As a result, the pressure is on for lenders to streamline processes and reduce costs, particularly for home equity lending which is a no- or low-cost proposition for lenders.

But in this competitive market, simply offering the product isn’t enough. Speed and ease of execution are what borrowers expect in the current digital landscape. To compete against the sleek, modern mortgage originations from tech-forward lenders, traditional institutions and credit unions need solutions that match their pace and exceed borrower expectations. That’s where FirstClose comes in with features for home equity lending that include:

• A fully digital borrower experience from application through close
• Instant verification of income, employment, assets and property
• End-to-end automation that shrinks origination timelines from 30+ days to as little as 5–7 days
• Seamless LOS integration to reduce friction and manual handoffs

This kind of speed and simplicity isn’t just about keeping up—it’s about staying relevant in a market that’s shifting faster than ever. With the right technology partner, lenders can deliver a digital mortgage and home equity lending experience that’s fast, easy and able to compete with the fast-moving innovation that’s driving the market—especially for closed-end seconds.