MountainView set to invest in “non-prime” mortgages

Seeks to capitalize on underserved market

Citing “significantly tightened” post-crisis underwriting standards that are preventing creditworthy borrowers from obtaining a mortgage loan, MountainView Management Company has announced a new program that seeks to address those shortcomings and make credit available to more borrowers.

MountainView Management Company, a subsidiary of MountainView Capital Holdings, is set to launch its “Peak Program,” in which it will purchase residential mortgage loans made to borrowers outside the current “prime” mortgage requirements.

“The company is responding to demand in the origination market that is not being met by lenders who have significantly tightened underwriting requirements and are adversely affecting consumers who can in fact demonstrate the ability to repay their home loans,” MountainView said in a release.

According to MountainView, the program will target loans with FICO scores in the mid-to-low 600’s, loan-to-value ratios up to 80%, loan amounts as high as $2.5 million, and loans to borrowers with bankruptcy or foreclosure at least 12 months in the past.

The company will also purchase loans that were made to borrowers with multiple investment properties, corporate borrowers, and foreign nationals.

The program will also include 30-year, fixed-rate mortgages, and adjustable rate mortgages as well.

“During the financial crisis, many borrowers experienced life event hardships from lost businesses, lost jobs, divorces and/or illnesses,” said Art Yeend, managing director and head of sales and marketing at MountainView Capital Holdings.

“As time has passed and the economy has improved, many of the affected borrowers have now recovered financially but do not qualify for conforming or jumbo prime loans,” Yeend added. “Additionally, due to losses suffered during the crisis, credit has been restricted and many self-employed borrowers who previously relied on alternative income documentation programs face similar credit qualification challenges.”

Yeend said that the borrowers whose loans will be purchased as part of the program will be people who recently completed bankruptcy; lost homes to foreclosure, short sale, or deed in lieu; are real estate investors, corporate borrowers, or foreign nationals; or are non-W-2 employees.

“These borrowers will be prudently and responsibly underwritten and will meet all ability-to-repay guidelines, but our expanded underwriting criteria allows for multiple risk layering not acceptable to prime lenders,” Yeend said.

The program will buy loans from traditional and specialty lenders in correspondent relationships to deliver “high-quality, non-prime” mortgages to MountainView’s Mortagge Opportunities Fund III.

The company plants to hold the loans in portfolio for investment.

“Because we are investing for our own portfolio and not for resale to third-party investors, we are in a position to make rapid credit decisions,” said James Sherrill, chief investment officer at MountainView Management Company.

MountainView said that it expects the program to launch in late October, but notes that underwriting guidelines and interest rates will vary by state.

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