ICE links MSP and Encompass to unlock home equity, refi opportunities

ICE Mortgage Technology’s new integration of its servicing and origination platforms reflects a broader trend in the mortgage industry — offering home equity loans while rates remain high and preparing for refinances as rates begin to decline.

The same logic underpins deals such as Rocket Companies’ acquisition of Mr. Cooper Group and Bayview Asset Management’s purchase of Guild Holding Co.

“This is another step to be able to create an end-to-end technology ecosystem that could support a loan throughout its entire lifecycle, from origination through servicing,” Tim Bowler, president of ICE Mortgage Technology, said in an interview with HousingWire.

The integration, announced on Tuesday and already available to clients, is offered at no additional cost. ICE views it as a competitive advantage to attract new customers to both platforms.

The new functionality enables borrowers to apply for home equity loans. home equity lines of credit (HELOCs) and refinances directly through Servicing Digital, the MSP digital consumer interface. Applications are processed by Encompass, and borrowers receive status updates via Servicing Digital, which is available on web and mobile platforms.

Bowler explained the integration is available to lender-servicers that use both the MSP servicing system and the Encompass loan origination system. Transferring data outside ICE’s ecosystem would introduce latency, data quality issues and other challenges, he noted.

While he didn’t provide a specific number, Bowler said “multiple dozen” clients qualify for the integration.

Golden opportunity

The focus on home equity loans is deliberate. Bowler said the industry is “dying” to take advantage of this “golden opportunity.” 

Servicers using MSP and Encompass can have a home equity application “pre-populated.” There is already core information in MSP, such as borrower details, property values and payment history. “They can cut days off of the process,” Bowler said.  

According to an analysis by Andy Walden, ICE’s head of mortgage and housing market research, U.S. homeowners held a record $17.9 trillion in home equity as of June. Of this total, $11.6 trillion is accessible for second-lien loans or lines of credit while maintaining a healthy 20% equity cushion.

Regarding refinance opportunities, Walden found that as of July 24, there were 670,000 highly qualified refinance candidates. That number could rise to 1 million if rates fall to 6.5%, and to 1.5 million if they drop to 5.25%. 

The analysis defined qualified borrowers as those with a credit score above 720, more than 20% equity and who are current on their mortgage, with an opportunity to reduce their rate by at least 75 basis points through refinancing.

“All the servicers we work with want to be positioned to recapture refinance activity if rates fall,” Bowler said. “They want that activity to stay with them.” 

Bowler also noted that his teams are “fully engaged” with the government-sponsored enterprises to make the necessary adjustments for implementing VantageScore 4.0, as recently instructed by the Federal Housing Finance Agency (FHFA).