EQUITY PROTECTION PROGRAM

Product Overview

The Equity Protection Program (EPP) is a fully insured loan program designed to assist lenders in generating more Home Equity lines and loans. EPP allows for expanded underwriting guidelines and protects a lender’s home equity portfolio against losses due to borrower default. In addition to the default protection, many lenders use the program to eliminate or reduce loan loss reserve requirements. Loans up to 100% loan-to-value are available for coverage.

In the event of a home equity default, the lending institution files a claim for the entire loan balance. No foreclosure is required to file a claim. A claim check for the entire loan balance is remitted to the financial institution in approximately 30 days.

Eligible Loan Types for New Loans Include:

  • Home Equity Lines of Credit (HELOC)

  • Purchase – Money Seconds (Combo, Piggyback subordinate financing for 1st)

  • Home Improvement Loans (Secured & unsecured)

  • Closed-End Seconds

Product Providers:

  • NFP Property and Casualty Services, Inc. is the national underwriting manager for the program.

  • Policy is underwritten by an A.M. Best “A” rated insurer

Program Benefits:

  • Risk transfer on HELOC’s and Second liens. Protects against borrower default for any reason

  • Allows lenders to safely broaden LTV thresholds up to 100%

  • Increased Home Equity loan volume

  • Expanded LTV thresholds to 133% on Secured Home Improvement Loans

  • Unsecured Home Improvement loans available (no title work, LTV or valuation required)

  • No foreclosure required.

  • Balance sheet protection – No losses reported

  • Eliminates REO expenses

  • Delegated underwriting authority

  • One rate & one liability pool for all loan types

  • A slight bump in APR covers the cost and there is nothing to disclose to the borrower.

  • Eliminates/reduces loan loss reserve requirements

Coverage:

  • Insurer pays 100% payment on defaulted loan balances for any reason such as job loss, divorce, bankruptcy, death, etc. The term of the policy is continuous until cancelled and all loan types are insured under one 10% liability pool. Claims are submitted at 90 days past due and paid within 30 days.

Premium:

  • Pricing is customized and quoted once a lender submits their application. One rate applies to all loans types and is payable monthly based on the total outstanding balance of insured loans. A small increase in APR covers the cost and is transparent to the borrower.

Reporting:

  • NFP provides a “live” formatted Excel spreadsheet for ease of monthly reporting. The report is due by the 10th of each month reflecting new and existing business.