Digital Mortgage
ComplianceMay 13, 2022

New launch boosts home equity lending

As published in Mortgage Professional America, May 13, 2022

Technology supports a form of lending that is on the rise

Wolters Kluwer Compliance Solutions this week announced the launch of its OmniVault for Real Estate Finance solution to support digital home equity lending, officials said.

The product uses the company’s industry-leading (and award-winning, company officials noted) technology to support digital home equity lending – both HELOCs and home equity loans. Additionally, the platform is used for already supported conventional, US government and jumbo first mortgages.

While OmniVault was just launched this week, its purchase was somewhat prescient. The technology used was acquired by Wolters Kluwer at the end of 2020 with the acquisition of eOriginal Inc., explained Simon Moir, vice president and segment leader, GRC Banking Compliance, Wolters Kluwer Compliance Solutions.

While the launch of OmniVault just occurred this week, the technology to power it has been with Wolters Kluwer in what now seems like a prescient purchase. “Yes, so in essence, eOriginal has been in the space of digital asset management since the early 2000s,” Moir told MPA. “So when the laws came into place to allow digital transactions to occur that were once only enabled in paper but could now be enabled in digital form, eOriginal was created and has led that industry initiative across housing, finance, auto lending, equipment leasing, solar and many other loan types as well.

Company officials noted that banks and credit unions are stepping up their efforts to grow their home equity businesses now that interest rate increases have made cash-out refinancing less attractive to millions of borrowers. The company’s technology enables such institutions to originate digital HELOCs as a Digital Original rather than merely a PDF or paper document, officials said.

When a HELOC is created within the OmniVault for Real Estate Finance offering, it establishes the Digital Original® of the HELOC, ensuring verifiable ownership and control, and enabling the sale, transferability, pledging, syndication and securitization of these digital assets, company officials said. The offering includes a digitally sealed audit trail providing a chain of custody and evidence for the digital assets. Wolters Kluwer’s proprietary technology has more than 20 years of proven success and supports both Mortgage Electronic Registrations Systems (MERS®) and non-MERS® eRegistry transactions, officials added.

With laws on books now in place governing digital transactions, an overlay of protection dubbed the “Safe Harbor Rule” further emerges that makes the company’s technology that much more in demand. The Safe Harbor Rule protects transfers of financial assets by a bank in connection with a securitization transaction that satisfies specified conditions.

“There are, in essence, guidelines for safe harbor which in essence puts the burden of proof on the borrower rather than the lender,” Moir noted. “Our vault technology has been built to meet those Safe Harbor requirements.”

Like Wolters Kluwer mortgage eNotes, digital HELOCs can be stored, managed and easily transferred in and out of an eVault on a single platform, officials said. The OmniVault Real Estate Finance solution provides clients with the same user experience and visibility across all asset classes, officials added. Moreover, officials noted, with Wolters Kluwer’s Rapid Deployment Solution (RDS), lenders can be using its platform for HELOCs within two weeks.

“Banks, credit unions and, to some extent, mortgage banks are focusing on home equity lending, with mortgage refinances down and homeowners having high home equity gains over recent years,” Steven Meirink, executive vice president and general manager, Wolters Kluwer Compliance Solutions, said in a prepared statement. “Being able to offer digital HELOCs will help lenders differentiate their customer experience, while our OmniVault will give institutions simple, consistent ways to originate and manage digital real estate assets across their organizations. Many of the largest financial institutions are already Wolters Kluwer eOriginal clients, so leveraging OmniVault by adding digital HELOCs can easily be done under their current MSAs.”

While millions of OmniVault-powered transactions have already taken place, the digital rise has yet to crest, Moir suggested: “Today, most HELOCs are held on balance sheets, but there are early signs that a secondary market is developing for these products. If this comes to fruition, the ability to quickly move digital assets to investors or into securities will take on greater importance,” he said. “Wolters Kluwer’s technology has already been used in more than 456 Asset Backed Securities (ABS) securitizations valued at over $164 billion and is firmly embedded in the ABS and Residential Mortgage-Backed Securities (RMBS) ecosystems.”

Simon Moir
Vice President, Banking Compliance Solutions, Wolters Kluwer Compliance Solutions
Simon Moir is Vice President, Banking Compliance Solutions, Wolter Kluwer Compliance Solutions. 
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