HousingWire reports Carrington Mortgage Services launches subprime lending program.
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.
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.
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.
At this stage in the economy and after this massive runup in home prices, a company targets subprime.
Amazing.
Mike “Mish” Shedlock
In part government doesn’t care about individual debt, if people can get dollars any way they can and spend them into the consumer based economy then that’s a win.
We shall see. There’s a big difference between now and 2007. In 2007, the housing industry, FED, etc… actually believed that it was impossible for housing to crash. Now, everyone is a lot more leary.
Just in time for President Eric “Place” Holder.
The trick is to sell the mortgage to one of government sponsored agencies, then it becomes the liability of even less responsible government. Neat if you can pull it off.
Wash, rinse, repeat.
“Where is the regulator? Just look at what Donald Trump and Mick Mulvaney have been up to. Just look at what Republicans in Congress and some Democrats have been up to.”
Funny. Eight years of obama growing government astronomically made the problem WORSE. Funny you didn’t mention that. In fact, these things rarely happened when government was not involved in loans and banks ate their bad decisions.
“Where is the regulator? They need to stress test both the originators and the buyers to make sure that there won’t be another systemic failure / bailout.”
Systemic failures of failed systems, are exactly what is wanted and needed. The more and harder, the merrier. Bailouts to prevent them, which is never, ever; in any history of any universe; anything besides pure, crass theft, is the problem.
They may be mis-judging the times and mood of the country…could be perp walks this time around. Be careful, boys.
Where is the regulator? They need to stress test both the originators and the buyers to make sure that there won’t be another systemic failure / bailout.
It’s like a game of chicken. The trick, for the originator to avoid being wiped out, is to not be holding too many toxic mortgages when the the music stops. 15 days from origination to sale … (on average).
As long as Carrington can sell the mortgages, they will be fine, regardless of how these turn out. I’m sure there are pension funds out there that would love some high yield junk. So, who will be at fault if (when) this blows up? Carrington is just doing their job as a financial intermediary, connecting willing borrowers, and willing lenders, and the lenders know perfectly well the risk involved. I won’t blame Carrington in the least; the fault will rest squarely on the backs of those that buy these loans; after all, if no one was willing to buy them, Carrington wouldn’t make them.