Consumers whose credit profile doesn’t fit neatly into the “Qualified Mortgage” box have a new outlet when it comes to getting a mortgage.
On Monday, The Capital Corps, a newly founded financial institution that focuses on providing access to capital to “diverse homeowners and small businesses,” and Commerce Home Mortgage, a California-based mortgage banking company, announced a partnership that will see the organizations offer mortgages to “non-traditional prime borrowers.”
Specifically, The Capital Corps announced that it signed and closed a strategic investment in Commerce Home Mortgage, which is licensed to lend in 26 states through its 25 retail offices and its wholesale channel.
Through the agreement, The Capital Corps will offer proprietary lending programs through Commerce Home.
The Capital Corps launched earlier this month and is led by several former Banc of California executives, including Steve Sugarman, the former chairman of CEO of Banc of California.
Sugarman co-founded The Capital Corps with Faith Bautista, the chief executive officer of the National Diversity Coalition. Sugarman serves as The Capital Corps’ chairman and CEO.
According to the company, it targets borrowers who “come from the 27% of the U.S. population the FDIC identifies as underbanked and are unable to obtain loans from banks due to overly burdensome or technical documentation requirements that do not reflect on the borrower’s true credit-worthiness.”
When The Capital Corps launched earlier this month, this is how the company described its target population:
The Capital Corps will serve non-traditional prime borrowers by returning to more traditional methods of underwriting residential real estate focusing on the 5-C’s of credit – including a borrower’s character. In its credit decisions, The Capital Corps will place special emphasis on the borrower’s character as opposed to narrow service-bureau-driven credit analytics deployed by banks during the recent credit crisis. The Capital Corps will partner with banks who wish to promote community development goals through lending to underserved communities including low income individuals and communities, borrowers with limited access to capital including African-Americans, Hispanics, underserved Asian populations, women-only borrowers, and borrowers with limited relevant credit histories.
The Capital Corps said its lending programs will launch in the first quarter of 2018 and will seek to address the needs of these borrowers.
As part of the deal, Mario De Tomasi, CEO of CHM, joined the executive team of The Capital Corps. Additionally, De Tomasi and CHM Founder Scott Simonich also become strategic investors in The Capital Corps.
“We are thrilled to work with Mario, Scott and the Commerce Home Mortgage team. CHM is a strong lender that works on behalf of its employees, borrowers and partners,” Sugarman said. “This transaction will allow The Capital Corps to become the leading lender for underserved, prime homeowners. We now expect our home mortgage originations to exceed $2 billion next year.”
De Tomasi said that the company is “excited” to work with The Capital Corps.
“Over the past 25 years, CHM has provided a strong platform for loan officers to serve the needs of diverse homeowners. By joining forces with The Capital Corps, we will now be able to offer proprietary programs on our platform which will enable CHM to grow its business more quickly and prudently,” De Tomasi said.
“I am excited to partner with Steven and Jeff and welcome both of them to the Board of CHM,” De Tomasi added. “Likewise, I am thrilled to work with Faith Bautista and the National Diversity Coalition as CHM continues to finance the dreams of America’s diverse populations.”