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Mortgage

Carrington Mortgage Services launches subprime lending program

Claims manual underwriting process is safer than other non-prime programs

Carrington Mortgage Services is launching a mortgage lending program that looks an awful lot like pre-crisis subprime lending, but the company claims that its new “non-prime” loans are much safer than the subprime loans of the mid-2000s.

According to Carrington, the program can make mortgages available loans to the approximately 100 million U.S. consumers who “have less than perfect credit.”

In a release, Carrington quotes a study from Experian that states that 21.2% of Americans have credit scores below 600.

And those are the types of borrowers that Carrington is targeting with this new program.

“For these consumers, especially in today's risk-averse lending environment, access to appropriate financing options can be a challenge,” the company said in a release. “Carrington has developed the expertise to qualify creditworthy borrowers with less-than-perfect credit, originate quality loans and service them.”

According to the company, its non-agency, non-prime loans are the “ideal solution” for borrowers that have “lower credit scores, high debt-to-income ratios, who are self-employed or who have had a recent credit event – such as foreclosure, bankruptcy, missed credit card or late mortgage payment – and may not be eligible for conventional or government loan product.”

Carrington’s loan program allows credit scores as low as 500. As stated above, “recent credit events” and a “history of late payments” are acceptable as well.

The loans are available for single-family homes, town houses and condos.

The program can be used for loans up to $1.5 million and cash-out refinances up to $500,000.

Additionally, Carrington said that for self-employed borrowers, bank statements are acceptable to verify income instead of IRS tax documents.

Carrington also said that it recently lowered its minimum FICO score requirement for Federal Housing Administration and Department of Veterans Affairs loans to 500 to “provide the widest possible range of opportunities to help underserved borrowers more easily become homeowners.”

Ray Brousseau, president of Carrington Mortgage Services, said that the company can safely underwrite non-traditional borrowers like these because of its experience.

‟For years, we’ve built our business around serving underserved borrowers – those with credit scores or life’s events that make it difficult for them to get a mortgage or refinance loan,” Brousseau said.

‟Because we manually underwrite each loan, we’re able to analyze an individual’s personal history, recognize their needs and responsibly lend to them,” Brousseau added. “Our clients, Realtor and broker partners bring us their challenging loans because they know that we know how to work with these borrowers to help them get their loans and keep them in their homes.”

According to Carrington, a borrower’s payment history is “one of the most important factors affecting a person's credit score and their ability to get a mortgage or refinance a loan.”

That’s where Carrington comes in, Brousseau said.

“Not all mortgage companies have the ability to offer loan products in a responsible way to those who don't fit into the traditional lending environment, and we don't want to see a return to the kind of careless lending practices that led to the foreclosure crisis back in 2008,” Brousseau said

“Carrington is an expert in underwriting and servicing challenging loans. We are one of the very few lenders nationally that can truly assist borrowers with low FICO scores and keep their loans performing at a high level,” Brousseau added.

“We’d like to be the lender of choice for otherwise qualified borrowers who have less than perfect credit scores, and for the real estate agents and mortgage brokers who work with them,” Brousseau concluded. “We believe there are millions of Americans who historically would have been able to qualify for a loan, but simply haven’t been able to get one since the Great Recession. And we believe they deserve a chance to achieve the dream of homeownership.”

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