Fintech Achieve Closes $175M HELOC Securitization
Early this month, California fintech Achieve announced the closing of its first AAA-rated securitization backed by $175 million in home equity lines of credit.
The securitization — which is the process of pooling mortgages into a pool and selling shares of the pool as bonds — consists of three classes of rated notes, which are backed by about 3,300 HELOCs originated by its affiliate. Obtain a loanformerly known as Lendingthe fintech company said in a release.
The HELOCs in the portfolio have an average grace period of seven months and range from two to 33 months. DBRS Morningstar assigned the securitization’s Class A notes a rating of AAA, the Class B notes a rating of BBB and the Class C notes a rating of B.
“This deal is among only a handful of AAA-rated securitizations of HELOCs issued since the Great Recession,” Achieve co-founder and co-CEO Andrew Housser said in a statement. “What makes this securitization truly unique is the consumer-centric nature of the Achieve HELOCs that underpin the deal.”
A HELOC allows homeowners to access the equity in their homes without refinancing their primary mortgage. It acts as a revolving line of credit that allows borrowers to withdraw as needed, and it comes with a variable interest rate.
Unlike traditional HELOCs, which offer variable interest rates, grace periods or balloon payments, Achieve HELOCs are fixed-rate and fully amortizing, eliminating the uncertainty and risk of payment shocks, the firm said.
Achieves HELOCs are fully drawn at inception and have a 10- or 15-year term that includes a five-year draw period.
Although they are mostly secured by a junior mortgage on the homeowner’s primary residence, a small portion of HELOCs have a first lien position and a valuation process aimed at preserving a good cushion of remaining equity, Achieve said.
According to California fintech, HELOC borrowers using Achieve saved an average of $860 per month compared to their previous unsecured debt payments, including student loans, credit cards and personal loans. This helps members “take care of their immediate financial needs without jeopardizing their ability to build long-term wealth through their home.”
Headquartered in San Mateo, California, Achieve has more than 2,700 employees nationwide, with additional offices in Arizona and Texas.
