Five Questions With: Steven M. Parente

Steven M. Parente is senior vice president and director of retail banking at Bank Rhode Island.
Steven M. Parente is senior vice president and director of retail banking at Bank Rhode Island.

Steven M. Parente is senior vice president and director of retail banking at Bank Rhode Island. He’s served in the financial service industry for more than 20 years.
BankRI has experienced increased activity in its home equity line of credit, or HELOC, business during the last two years.
Parente talks with Providence Business News about the growth, why it’s happening and what it means for the Rhode Island economy.

PBN: With home values improving in Rhode Island, what is BankRI seeing here in the state in terms of home equity lines of credit activity?
PARENTE:
Home values in Rhode Island have been steadily improving, and that is playing an important role in what we’re seeing as a two-year trend in more home equity line of credit activity. In 2014, BankRI experienced an 80 percent increase in the number of HELOC applications taken over 2013, and a 100 percent increase in the number of applications closed over the same time period. This trend has continued in 2015, with our YTD booked volume outpacing last year’s total. We see our growth in HELOC activity as an indication that both home values are on the rise and principal mortgage balances are being paid down. The result is improved credit and equity for borrowers.

PBN: What contributes to the increase or decrease of HELOC activity, and what does it mean for the economy as a whole?
PARENTE:
There are a number of factors that contribute to changes in HELOC activity. Along with rising home values, a more stable job market drives increased activity as homeowners feel more comfortable in their financial footing after years of exercising caution. As people become more confident in the economy and with their own finances, there’s an increased interest in borrowing to take care of things they may have put off in recent years. And when there’s growth in borrowing, it impacts the entire economy. People are spending more in stores for goods, and investments in construction are always a good economic indicator. You also have people who will be more comfortable making larger home improvements or purchasing a second home. In its most simple form, the economy as a whole benefits from increased HELOC activity through the availability of greater consumer cash flow.

PBN: What is among the top reasons homeowners apply for a HELOC and what products does BankRI offer that are unique in the market?
PARENTE:
Home improvements and reinvesting in the home continue to be the top reasons people apply for a home equity line of credit, but there are a number of other uses. A HELOC can also be used for education expenses or debt consolidation. Some may also apply for a home equity line of credit if they’re looking to establish a safety net for future needs or expenses. BankRI’s HELOC products are unique in that they are structured as life loans; there is no term date, meaning there isn’t a balloon or a need to refinance. With BankRI, there are no closing costs, points or appraisal fees with a home equity line of credit. We are also transparent with our rates. Customers won’t find special introductory rates that increase after a set amount of time – our HELOC rates are always based off of prime, and at certain dollar values, the rate is below prime. I think the ways in which our HELOC products differ from others in the market has played a significant role in the increased activity we’ve seen since 2013.

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PBN: Have you tightened HELOC underwriting since the financial crisis?
PARENTE:
Our home equity lending products and practices have remained relatively the same since the bank’s inception nearly 20 years ago. We experienced little to no loss during the recession, and as a result, there has not been a need to change our underwriting guidelines. During the recession, we looked at our portfolio to assess our exposure and were extremely confident that we would not experience losses. In fact, we reinvested in Rhode Island by offering a fixed rate 30-year home equity loan with a lower rate and still maintained no closing costs, points or fees. This helped hundreds of Rhode Island families refinance to a lower monthly payment without incurring any out-of-pocket expenses, allowing them additional financial flexibility.

PBN: Are you seeing increases in delinquencies and is this a concern moving forward?
PARENTE:
I am pleased to say that BankRI has not seen any increase in delinquencies. Our HELOC products are very flexible in regard to the payment options we offer. That flexibility allows our customers the ability to adjust their payments based on their needs and circumstances. Our loan officers ensure that each customer fully understands the payment options available to them and the impact each has on the principal balance of their line of credit. We also understand that, at times, people’s situations change and when this happens, we’re happy to work with our customers.

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