Industry veteran warns that competitors and servicers are ready to take your business
Much of the talk in the non-QM space in 2025 has been about the surge in second lien products, especially as mortgage rates remained elevated through the first half of the year.
However, many homeowners still don’t realize they can tap into home equity for debt consolidation, home improvements, or other major expenses.
One industry veteran believes it is up to brokers to continue educating customers on these products. Not only to help homebuyers improve their financial situation without giving up a low-rate first lien, but also to stay in touch with past customers before servicers come to try to take those customers away.
Tom Davis (pictured top), chief sales officer at Deephaven Mortgage, was shocked to see a recent bank survey showing how many homeowners were completely unaware of home equity products.
“It was one of the top 10 banks in the United States, and in their survey, it said like 35% of their mortgage borrowers did not know home equity products existed,” Davis told Mortgage Professional America.
Differentiating yourself from the competition
Davis said another benefit of pitching second-lien products is that it sets you above your competition. If your customers are shopping around, you can call out those who are only trying to offer them a refinance.
“As an advisor or a loan officer, you should present both,” Davis said. “You can say, ‘You could do a refi cash out on your first, but you're going to lose this 2.5%, 3% mortgage rate that you will never see in your lifetime again, more than likely. Or you could keep that, protect that right. That’s an important asset: cheap money. And then you could do a second lien for the amount that you need at this rate.’
“And if that borrower is talking to someone else about a first lien, and they're only giving them one option, and you go as an advisor and you say, ‘Hey, I know you're probably talking to someone else, but here's another option.’ I think it's a great opportunity for loan officers to really differentiate themselves and bring value over loan officers just pushing that first.”
Another way to work with customers considering either a refinance or a second lien is to embrace the low-rate first lien rather than lamenting that it might keep them from refinancing. He said that’s where the equity product can help you close the deal with a customer who's not willing to give up a low-rate mortgage.
“You can congratulate them on their equity, congratulate them on their low note rate,” he said. “Ask them what their financial goals are. Have they thought of renovating their home? Are they looking to consolidate debt? If the loan officer doesn't do that, someone else is going to do that, and then they'll lose that borrower down the line. You're seeing that people really embrace it now compared to six months ago.”
Servicers on the prowl
As Davis has warned about before, servicers are ready for potential rate drops in 2026 to jump in and refinance customers. He urges brokers to use second-lien products as a foot in the door with former and new customers to keep that from happening.
“For an originator not to offer a second lien, I think it's a big mistake,” he said. “Because if they don't offer the second lien, someone else is going to service them, because they do have a financial need. Whether it's consolidating debt, whether it's paying or renovating their home, funding their business, putting their kids through college, there are all these different financial goals that people have.”
As refinance activity is poised to surge, eLEND COO Michael Brenning urges brokers to prepare as servicers strengthen their retention strategies. He says the industry is more equipped than ever to compete for client portfolios.https://t.co/9Of9TaCuNm
— Mortgage Professional America Magazine (@MPAMagazineUS) October 29, 2025
In addition to potentially losing a customer to a servicer if you are unable to provide equity loans, Davis believes you could also start to lose referral partners. If you are sent customers and you aren’t able to help them, those referral partners will likely look elsewhere next time.
“There's this generational equity opportunity for originators to talk to their borrowers,” Davis said. “If you're an originator, and you don't have access to these products, or you're not focused on them, you're at a competitive disadvantage. You're potentially allowing other loan officers to penetrate your previous clients, those relationships, as well as your current referral partners.
“Because if that referral partner sends you a borrower and you say you can't do it, or you don't know how to do it, they're going to go to the person who can do it. It's no longer a ‘nice to have.’ It's a must-have.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
