Carrington Mortgage Services and Privlo are among the many nonbank mortgage companies stepping in to fill the void left by big banks in offering new products that cater to underserved borrowers.
Carrington recently launched the national availability of "The Carrington Loan,” which offers borrowers a more transparent, simplified home loan
process with no closing costs or upfront financing fees. The new product helps reaffirm Carrington’s focus on home purchases for borrowers in the sub-640 FICO score range.
Earlier this year, Carrington announced it would focus on borrowers with lower credit scores. The lender lowered its minimum credit requirement to a FICO score of 550 and expanded its guidelines on several FHA
and USDA loan programs.
According to Carrington, one in three consumers has a FICO credit score below 650. “For these consumers, and the brokers and agents working with them, obtaining access to appropriate financing options can be a challenge – one that Carrington is uniquely equipped to handle,” Carrington said.
Privlo, a VC-backed alternative mortgage lender, is expanding its operations into The Commonwealth of Virginia by offering an alternative to creditworthy borrowers whose career, lifestyle and finances may be considered too complicated to prove to traditional lenders.
"Borrowers have changed dramatically in the last couple of decades,” said Privlo CEO Michael Slavin. “There's an entire class of solopreneurs, freelancers, small business owners and even just regular folks who are much more creditworthy than their tax returns might show. We're finding that even in traditional professions like nursing and law, people are being rejected for mortgages when in fact they are extremely well qualified.”
Privlo aims to fix the issue with a technology platform and business processes that better qualify individuals, taking into account more factors such as personal history and future financial prospects to assess a mortgage application.
The problem is especially pronounced in a state like Virginia where one in five purchase applications were denied last year. "Virginia is seeing a boom in independent businesses like aquaculture, wine, biotech and technology startups, and realtors in the area tell us something like this will really help struggling borrowers that are giving up on the idea of home ownership," said Privlo's Chief Credit & Product Officer Saro Vasudevan. "Right now we estimate it's a $200 billion market nationally and will likely grow as the majority of Americans continue to evolve financially and define their own careers."