New Mortgage Program Targets Unmet Demand in Subprime Market

Responding to what it sees as an unmet demand in the mortgage origination market, MountainView Management Company is targeting subprime borrowers in its new loan program. However, these individuals don’t fit the historical description of non-prime borrowers.

MountainView’s Peak Program will serve borrowers that are creditworthy and can demonstrate the ability to repay their home loans, but are not able to meet current prime mortgage requirements due to tightened underwriting rules.

“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, in a written statement. “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.”

The Peak Program will buy from traditional and specialty lenders in correspondent relationships that deliver “high-quality, non-prime mortgages” to MountainView Mortgage Opportunities FUND III, the company stated in a release. All loans acquired by the Fund through the program are intended to be held in portfolio for investment.

MountainView, which has offices in Denver, Houston, Los Angeles, New York and Scottsdale, AZ, is a subsidiary of MountainView Capital Holdings, an asset manager specializing in residential mortgage-related investment strategies. 

The company manages MountainView Mortgage Opportunities Funds, which launched in 2008 and collectively purchased 2,334 whole loans with total unpaid principal balance of $479.3 million as of June 30, 2014.

Among the program’s highlights are 30-year fixed-rate loans, borrower FICOs in the mid- to low-600s, loan-to-value ratios up to 80%, loan amounts as high as $2.5 million, as well as loans to borrowers with bankruptcy or foreclosure at least 12 months in the past. Loans in the program can also be made to borrowers with multiple investment properties, corporate borrowers and foreign nationals.

“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 is expected to launch in late October and will include both fixed- and adjustable-rate mortgages. Underwriting guidelines and interest rates, however, will vary by state, MountainView said.

Written by Jason Oliva

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