Cash-out refinance volume has been effectively dead for two years, but demand for capital has not. Homeowners locked into 2020 and 2021 rates are accessing equity through second liens rather than touching their first mortgage. Deephaven Mortgage sizes equity origination at roughly $150 billion in 2026, part of a non-agency market it puts at close to $400 billion overall. The gap between available product and broker familiarity is where most of the opportunity sits.
Tom Davis, chief sales officer at Deephaven Mortgage, puts a number on what brokers are missing. "If you're not focused in the non-agency space, then you're leaving potentially one out of every four, one out of every five deals on the table," he said. Many originators did not replace the drop in cash-out refinance volume with anything else. The borrowers are still there. The pipeline exists. The gap is product knowledge, not demand. Brokers who built their business on refinance volume and never added an equity product are the ones most exposed to this loss.
A cash-out refinance restructures the entire loan at today's rate. A second lien leaves the original loan untouched and prices only the new capital being borrowed. For a homeowner sitting on a 2.875 percent first mortgage, the calculation is immediate. Diego Londono, managing partner at LendingSpot in South Florida, regularly closes seconds of $400,000 to $600,000. "They love their 2.875 percent rate," he said. "They don't want to touch their first mortgage." Borrowers accept rates in the 8 percent range because the alternative is repricing a much larger balance. Equity products now account for roughly 15 to 20 percent of Londono's business.
Deephaven's internal market analysis of Q1 2026 recorded $47 billion in equity extraction industrywide. More than half of that total, $25 billion, went through second liens rather than cash-out refinances. Davis expects the non-agency market to grow 30 to 35 percent year over year. He also expects agency guidelines on investor, second-home, and condo loans to stay tight. "They're not going to budge on that stuff," he said. "So guess what? Non-agency is going to fill that gap." Deephaven's product lineup runs from non-QM mortgages and closed-end seconds to HELOCs up to $1 million. Real estate transition loans reach up to $15 million for fix-and-flip, bridge, and ground-up construction.
Three profiles come up across the conversation. The first: low-rate homeowners protecting a first mortgage they have no reason to refinance. The second: roughly 40 percent of Americans who own their homes free and clear, according to the US Census Bureau. The third: self-employed borrowers whose tax returns understate actual cash flow. Davis noted the average American home is 40 to 50 years old. Renovation spending nationally is projected to hit roughly $600 billion in 2026, according to the Home Improvement Research Institute. Free-and-clear homeowners often sit on decades of accumulated equity in properties that need real money spent on them. Many originators see no refinance opportunity and never call.
Matt Rohl, vice president of strategic initiatives at Deephaven, argues the answer is already inside the databases originators built during the refinance boom. "The same marketing strategy can be used on HELOCs and closed-end seconds to replace that cash-out refinancing," he said. Brokers spent years tracking appreciation and loan balances to spot refinance candidates. That data remains current. Londono tested the approach with an email campaign that gave clients a payment calculator before they spoke with a loan officer. Borrowers began calling about draws of $50,000, $100,000, and $200,000. "People can be uncomfortable saying they're in debt," he said. "It's a very personal subject." Seeing the payment privately gave borrowers a way into the conversation.
Londono closed a loan for a seawall contractor in Parkland, Florida, who owned a $5 million house with a $2 million first mortgage. His bank had already turned him down. His tax returns showed far less income than the $300,000 to $400,000 his business deposited each month. Londono ran the file on bank statements and grew the deal substantially. "We had the opportunity to turn a $400,000 or $500,000 second HELOC into a million-dollar HELOC," he said. The client's bank had sent him elsewhere. "Without this product, I don't know if we would have been able to get it done anywhere else," Londono said. Self-employed borrowers at this income level are a consistent segment conventional lenders routinely turn away.
Bryant Schouest, a broker at Southern Mortgage Corp. in Atlanta, offers the clearest diagnosis: "Most brokers aren't offering these solutions simply because they aren't familiar with the products." His colleague Paul Schouest adds that a skilled account representative matters as much as the product menu. "It's important to have a good account rep to work with," Paul said. "The products are out there, but the account rep can help you put the deals together." Mark Hammond, a wholesale account executive at Deephaven, frames the retention risk directly. "Mortgage brokers generally do not earn continuing revenue from a loan once it closes. Every month you're starting over again with a new pipeline." A borrower who cannot get an equity product through their broker will often end up with their mortgage servicer, giving that servicer another chance to capture the first mortgage when rates eventually move. Brokers looking for a deeper resource on non-agency products can find related analysis and reports in MPA's premium content hub.