Banks and credit unions have historically been the predominant source of home equity lending. However, the same factors driving home equity’s resurgence have also stunted purchase and refinance volumes for independent mortgage banks (IMBs), prompting them to enter the home equity lending arena. Because the playbook for first-lien originations doesn’t necessarily translate to the home equity space, capturing this growth opportunity means IMBs must invest in tools and processes designed specifically for this product line.
Market share is shifting
IMBs originated 84.1% of single-family, first-lien loans in 2025, according to the Community Home Lenders of America’s annual report, but banks and credit unions still originate the bulk of home equity loans and lines of credit. That dynamic is starting to change. Banks’ share of outstanding home equity assets narrowed to 37.2% in April 2026, down from 41.0% a year earlier, while credit union share remained essentially flat. Meanwhile, IMBs’ share increased from 28.1% to 31.8% over the same period, indicating the ground that banks are losing is going almost entirely to IMBs.
IMBs are also sitting on the demand driving this growth. Nearly two-thirds of second liens originated in Q1 2026 went to borrowers with first mortgage dates from 2020–2022, who likely would rather borrow against their home’s equity than give up their COVID-era rate. Given IMBs’ share of first-lien originations, these borrowers are already in an IMB’s customer database and waiting to be tapped. Rocket Mortgage illustrates the scale of this opportunity. In Q1 2026, it became the largest originator of home equity loans in the country, the first time a nonbank has topped the quarterly rankings, with an estimated $3.05 billion in originations, roughly double its production from the same period in 2025.
Execution drives opportunity
However, demand and opportunity don’t mean much if execution falls short. The processes that support most home equity originations today are manually driven, largely because these workflows were built for a product that historically didn’t need to move fast. That’s a significant reason why pull-through rates remain below 50% and per-loan origination costs have climbed to roughly $4,600. IMBs can close this gap the same way they won first-lien share with a faster, digital-first process, but they must do so using home equity-specific technology and processes.
A first-lien POS is built around a full loan application, a hard credit pull, income and asset documentation and a timeline that assumes weeks, not minutes, whereas a home equity application asks a narrower question: how much equity can this borrower access and how quickly? On the backend, first-lien title, valuation and settlement vendors are configured for appraisal-driven, 30- to 45-day timelines, while home equity needs to close in days using AVMs or desktop valuations. Thus, running a home equity loan through the same tech and processes built for a first-lien timeline squanders the digital-first advantage IMBs have.
Purpose-built tools close the gap
FirstClose’s XpressEquity is a point-of-sale built specifically to support home equity originations. Borrowers get home valuation, available equity, loan options and a pre-approval decision in as little as 5-7 minutes, from a soft credit pull that doesn’t require a Social Security number up front. A short qualification screen filters out ineligible borrowers before they ever reach the LOS, so loan officers spend their time on applicants who are actually likely to close. Lenders using it have seen a 40% increase in applications and a 50% increase in application completion, with 38% of applications instantly approved.
Looking past the application stage, FirstClose’s Order Management Services closes the backend gap the same way by centralizing home equity-specific valuation, title, flood and settlement services into a single, connected workflow, replacing the vendor portals and email threads that make each application expensive to process in the first place. Lenders using it have achieved:
- ~85% reduction in manual processing for home equity loans
- Turn times cut from 30–60 days to under two weeks
- A single connected workflow for valuation, title, flood and settlement coordination
IMBs already have what this opportunity needs most: existing customer relationships, a market shifting in their direction and a borrower base that’s already waiting to be tapped. What determines whether that turns into volume is how fast an IMB can execute once a borrower asks.
To talk through what a faster home equity workflow could look like at your institution, reach out to the FirstClose team.
About the Author
John Aslanian
Chief Revenue Officer
John leads the FirstClose go-to-market activity, business development, sales, account management, and the continued evolution of the FirstClose partner ecosystem. He has 25+ years of experience leading sales teams in the mortgage technology / SaaS space, including at nCino and ICE Mortgage Technology.
https://www.linkedin.com/in/johnaslanian/