Splitero CEO Sees Room for HEIs as High Rates Constrain Traditional Borrowing

A proposed role alongside traditional equity products

Home equity investments, or HEIs, could take a larger place in the U.S. home-lending market while mortgage rates remain high, according to Michael Gifford, CEO of San Diego-based provider Splitero. In an interview published by HousingWire on October 26, Gifford said homeowners with substantial equity can face difficulty qualifying for traditional ways of accessing it.

He pointed to tighter underwriting for HELOCs and other products, including debt-to-income and credit-score requirements. Gifford said a homeowner may hold a low-rate first mortgage and considerable equity, yet find refinancing unattractive if a new loan would carry a much higher rate.

How Splitero describes its product

Gifford characterized an HEI as distinct from both a HELOC and a reverse mortgage. He said Splitero’s product provides a lump sum without a required monthly payment, while allowing the homeowner to retain the existing first mortgage.

According to Gifford, repayment can occur later through a refinance, a home sale or available cash. He said the absence of monthly payments means investors seek higher returns than on a HELOC, which does generate monthly yield; in his view, HEIs should ultimately be priced somewhat above HELOCs but below their current level.

Splitero uses what it calls a “safety cap,” Gifford said. He stated that the company’s cap is 17.99% and is intended to set the maximum a homeowner would pay on the funds. Because both the timing of repayment and future home value are unknown at origination, he said the precise cost outside that cap cannot be known in advance.

Capital and regulatory questions

Gifford said investor participation and securitizations have increased as the interest-rate environment changed. He described demand for Splitero securitizations as substantial and said further capital-market participation could lower pricing for consumers over time. Those are the company’s expectations, rather than an announced pricing change.

The regulatory framework remains a central issue. Gifford said Splitero supports clear rules and works with state and federal regulators, but argued that annual percentage rate disclosures are difficult for HEIs because the payoff date and home value are uncertain.

He discussed a Senate proposal that would classify HEIs as residential mortgages under the Truth in Lending Act. Gifford did not describe a final federal decision. He also cited Illinois as an example where Splitero worked with the state on data and proposed legislation, while noting that consumer awareness and lawsuits involving the sector remain challenges.

What to watch

The market’s next developments include whether additional securitizations draw more capital, whether that changes HEI pricing, and how federal and state rules define disclosures and oversight. For now, Gifford’s assessment reflects the view of a provider operating in an early-stage product category.