Equity’s generational moment
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Deephaven Mortgage’s Tom Davis says equity products – from second liens to digital HELOCs – are now the true cash-out game, and originators who ignore them risk surrendering clients and market share to data-driven servicers
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Ask Tom DAVIS where the real growth is in a challenging rate environment, and his answer is immediate: equity. The Deephaven Mortgage chief sales officer calls it a generational opportunity, one that’s being fuelled by unprecedented levels of home equity on one side and unprecedented consumer debt on the other.
With traditional refi cash-outs largely sidelined, Davis says the cash-out game is equity products – and warns that originators who don’t embrace second liens and HELOCs are already ceding ground.
“The CEO of a large servicer was quoted saying that retention is their religion,” Davis says. “What that says to me is that as soon as a servicer gets the loan, they start soliciting your clients. And they’re getting better at it.”
Deephaven Mortgage has been a leader in non-QM since our origin in 2012. Our longevity and strength in the non-QM space have allowed a significant number of borrowers to achieve homeownership who otherwise would not have under traditional requirements. Deephaven champions mortgage borrowers whose entrepreneurial drive and determination are often why they cannot qualify for a traditional loan.
Their non-QM portfolio includes DSCR, bank statement, HELOANs, first- and second-lien digital HELOC, and non-prime solutions. As experts and educators in the non-QM sector, Deephaven offers extensive training to their mortgage partners.
Learn more: www.deephavenmortgage.com or email us at info@deephavenmortgage.com.
“It’s imperative to embrace [non-QM] products. If originators don’t offer them, they’re not only losing market share – they’re losing it to servicers who are focused on taking it from them, not just today but tomorrow too”
Tom Davis,
Deephaven
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Published May 18, 2026
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“The writing is on the wall: the cash-out game is equity products. You should be soliciting clients on these products to access that generational opportunity”
Tom Davis,
Deephaven
Non-agency’s moment: inside a $500 billion-plus opportunity Davis’ conviction is rooted in a non-agency market he sees as resting on three powerful pillars: non-QM, equity, and transition lending. Together, he argues, they’re reshaping where growth will come from over the next few years and how originators should think about their product mix.
The first pillar is non-QM. Deephaven was a pioneer in this space, launching in 2012 to help bring liquidity and new structures to borrowers who sit just outside the agency box. Davis expects non-QM alone to reach roughly $150–$180 billion in annual originations this year, as more lenders and brokers become comfortable underwriting self-employed borrowers, investors, and other non-traditional profiles.
The second – and, in his view, most transformative – pillar is equity. US homeowners are sitting on an estimated $35 trillion in home equity, with about 80 percent locked into mortgage rates below 5 percent, making them reluctant to refinance their first liens. At the same time, total consumer debt across credit cards, auto loans, and student loans has climbed to around $5 trillion.
That combination is fuelling demand for second-lien loans and HELOCs as borrowers look to renovate aging housing stock, consolidate high-cost debt, finance children’s education, or tap equity to grow their businesses and investment portfolios. The latest Home Mortgage Disclosure Act analysis suggests originations in this segment may already be close to $130 billion, and we expect originations to surpass $150 billion in 2026.
The third pillar is transition lending, including fix-and-flip, bridge, and ground-up construction loans that cater to investors and developers looking to move quickly on opportunities. He pegs this niche at roughly $50 billion, sitting alongside non-QM and equity as part of the broader non-agency opportunity set.
Stacked together, these three pillars add up to a market Davis believes could comfortably exceed $350 billion and push past $500 billion once firmer equity data is in and prime jumbo volume is included. There’s increasingly less room for argument: these are mainstream numbers.
“In practical terms, that means one out of every four loans will be non-agency,” he sums up. “It’s imperative to embrace these products. If originators don’t offer them, they’re not only losing market share – they’re losing it to servicers who are focused on taking it from them, not just today but tomorrow too.”
Equity in action: why seconds and digital HELOCs are the new cash-out game In an environment where borrowers are understandably unwilling to give up ultra-low first-mortgage rates, second-lien loans and modern HELOCs are the new heroes. They align with a list of real-world use cases, including demand from homeowners looking to renovate older properties – more than half of equity deals in the US are for this reason, with spend expected to top more than $600 billion – consolidate high-interest consumer debts, or cover major life events like tuition and medical bills.
Then there are investors eager to unlock equity in cash-flowing properties without touching cheap first-lien financing, and a strong appetite from a bourgeoning self- employed cohort. With roughly 18 million Americans in that category, many prefer to leverage property wealth to grow their businesses rather than take on unsecured debt.
“The writing is on the wall: the cash-out game is equity products,” Davis notes. “You should be soliciting clients on these products to access that generational opportunity.”
Then there are investors eager to unlock equity in cash-flowing properties without touching cheap first-lien financing, and a strong appetite from a bourgeoning self employed cohort. With roughly 18 million Americans in that category, many prefer to leverage property wealth to grow their businesses rather than take on unsecured debt.
“The writing is on the wall: the cash-out game is equity products,” Davis notes. “You should be soliciting clients on these products to access that generational opportunity.”
Deephaven prides itself on a full suite of equity products, ready and waiting to be leveraged. On the closed- end side, Deephaven’s second-lien offering is designed for borrowers who want certainty. Loans can go up to around the $1 million mark or higher, with a fixed term and payment so clients know exactly what they’re taking on.
What Davis sees as differentiating, though, is how borrowers qualify. In addition to traditional full doc, Deephaven allows bank-statement and P&L-based underwriting, and even DSCR on second liens – an unusual feature in this corner of the market that opens the door to more clients in key segments, such as investor and self-employed borrowers.
The HELOC, by contrast, is all about flexibility. Rather than a fixed payment, borrowers pay based on what they draw, with the ability to tap and re-tap the line as needs arise. Davis notes that only a handful of investors offers a truly digital HELOC and that among them, Deephaven stands out for allowing full appraisals when automated values fall short and for supporting alt-doc income qualification instead of relying solely on automated bank-statement parsing.
For originators, Davis frames seconds and HELOCs as both a revenue stream and a relationship tool. It’s a great reason to pick up the phone, call a past client, and congratulate them on their equity – and potentially roll that first deal into a second one.
“Tell them they nailed it by buying a house in 2021 at a rate they’ll never see again and are now sitting on all this appreciation that could be put to work,” Davis explains. “The best originators in the country are the ones who find ways to stay engaged, and we’re seeing a ton of momentum here.”
Winning the equity game: a practical playbook for brokers and LOs For Davis, equity isn’t just a macro story; it’s a concrete business plan for originators who are willing to be proactive. While revisiting the entire past client base is low-hanging fruit, beyond the database Davis sees big opportunities for those willing to look outside the box.
An example is home magazines or directories that showcase renovation firms and other tradespeople. Those businesses regularly meet homeowners who want to tackle large projects but don’t have the cash on hand to fund them. Originators who build referral relationships there can become the go-to financing partner
behind those jobs, effectively turning those local connections into a steady equity-lead source.
Davis also notes that some of the biggest players in the second-lien space are doing something very simple: buying equity leads others don’t want. High-volume originators are purchasing relatively inexpensive lists of homeowners with equity – considered “cold” by traditional purchase-market standards – and turning them into profitable second-lien and HELOC pipelines. With average equity-loan amounts north of $200,000, even modest conversion rates can translate into meaningful production.
Underpinning this playbook is Davis’ contention that Deephaven is a one-stop shop for non-agency solutions. Noting that top originators are also the ones with a full arsenal, able to meet virtually any need a client may have, he positions the lender as one of the few offering products that cover all three pillars of the non-agency realm.
“An originator, banker, or broker who wants the same breadth elsewhere would likely need to be approved with four different investors to replicate Deephaven’s menu,” he notes, adding that nobody needs to have all the answers in one day – but they do need to choose partners who do.
“Don’t let not knowing stop you from entering this space,” he says. “Work with an expert who has expertise, knowledge, and focus. Build out a strategy around that.”
Home equity by the numbers
US homeowner equity
$35T
Locked in sub-5% rates
~80%
Total consumer debt
~$5T
Renovation spend (projected)
$600B+
Self-employed Americans
~18M
Avg. equity loan amount
$200,000+
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Deephaven Equity Advantage HELOC Highlights:
Loan amounts up to $1,000,000
12-month personal or business bank statements allowed
for self-employed borrowers
One-year full doc available
Co-borrowers allowed
LLC vesting allowed
Available in Texas for primary homes only
Rural acreage up to 10 acres
2.5% LPC offering on the
full line amount for HELOC