Are you and your members getting the most value from your home improvement
lending program? It’s estimated that $280 billion will be spent on home improvement
products in 2005 – a 3.5% increase over 2004.* If the following statements describe
your underwriting guidelines, you may want to re-evaluate your home improvement
1. LTV restrictions are based on the current value of the borrower’s
Allow your members to borrow up to 100% of the future improved
value of their homes. This will provide them with more flexibility in choosing
their improvements and you with more flexibility in providing the loan needed
to complete the home improvement.
2. Lending is allowed for only owner-occupied dwellings.
Allow members who do not live in the home to receive lending funds. This type
of underwriting expansion will allow landlords to make large-scale renovations
and extensive repairs to help keep their buildings up to code. It can also provide
needed funding for second home improvements.
3. Appraisals are always required.
Basic home improvement loan amounts, such as $25,000 or less should be verified
by purchase price and stated value methods and not require an appraisal. The
benefits to your members in receiving a loan that does not require an expensive
and time-consuming appraisal can be substantial.
4. Home improvement loans should be capped at $50,000.
Not necessarily - lending up to $100,000 for home improvement projects gives
your members the capital and flexibility they need to get an addition, renovation,
or even major repair work finished quickly and with the best quality of materials.
Members will be relieved that projects won’t have to be finished in stages or
postponed due to dollar restrictions.
5. Members should have a minimum of four years home ownership
Neither of these stipulations need apply. These types of limitations may restrict
many worthy members from obtaining the funds they need. Providing home improvement
lending to new homeowners and newly employed members is a strong community service.
Fifty-two percent of new home buyers have completed home improvement projects
within one year of their purchase date.*
If you are limiting your home improvement lending by any of the above reasons,
Old Republic Insured Credit Services, Inc. (ORICS) can help you expand your
program to meet more member lending needs. We offer a variety of solutions for
home equity and homeowner unsecured lending as well as home improvement loans
or HELOC’s. ORICS has specialized in credit indemnity loss protection for over
fifty years and has helped over 3,000 financial institutions manage risk and
increase loan volume. For more information, call 800.621.7873 or visit the ORICS
website at www.oldrepublicics.com.
*www.hiri.org/currentresearch.htm (Home Improvement Research Institute: “Recent
Homebuyers Survey”, March 2004)
Building lending relationships for over fifty years…one insured
loan at a time.
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