Carrington Launches Subprime Mortgage Lending

Mike Mish Shedlock

Bad credit? 500 FICO score? Carrington doesn't give a damn.

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

Comments (26)
No. 1-26
Carl_R
Carl_R

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.

AWC
AWC

@Carl, Nah, no fault here. Fed will buy in all the Junk. Only this time around, they will probably just hand over the deeds to the deadbeats. Foreclosures in the Suburbs make for blight and loss of votes. Not likely to go that route again. Brave New World we have here.

AWC
AWC

As a Realtor once told me, "As long as they are in a leather bound portfolio, with a pretty ribbon, anyone will buy them. And they probably won't even untie the ribbon."

AWC
AWC

Now, tell me, is adding that 21% to the potential pool of house buyers price positive or price negative?

TheLege
TheLege

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).

thimk
thimk

I think I am going to watch the "Big Short" again.

pi314
pi314

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.

Snow_Dog
Snow_Dog

“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.”

Wait!
Don’t tell me, let me guess!

The CEO of Carrington is Angelo Mozilo’s nephew.

abend237-04
abend237-04

They may be mis-judging the times and mood of the country...could be perp walks this time around. Be careful, boys.

Snow_Dog
Snow_Dog

https://youtu.be/J8CqaHTygSc

...Better still, time yet again, to revisit Mr. Willam K. Black

AWC
AWC

While we are visiting assorted William's, here is the one that got me out of harms way back in 07. https://www.youtube.com/watch?v=yvtOTXi3aQk

Stuki
Stuki

“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.

Sechel
Sechel

Don't know how Carrington expects to securitize anything. The Carrington mortgages were the worst performing bonds on the street. They engineered a scheme where they would repeatedly modify and recapitalize the loans every few months and then liquidate just at the time there was no more equity left in the mortgages. As an owner and servicer they found a way to convert the senior bonds into the lowest ranking part of the waterfall and enriched themselves at bond holder expense. Surprised these guys never got charged with anything. Guess there are plenty examples where unethical != illegal.

Sechel
Sechel

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. You can't blame the regulators this time when our elected leaders and their appointees are busy gutting regulation and emasculating those regulators. Took less than ten years this time. I'm impressed.

Snow_Dog
Snow_Dog

Black and White sure have a way of explaining things in black and white.

Snow_Dog
Snow_Dog

Steve Carrell
Christian Bale
Ryan Gosling
Brad Pitt

Actors being approached to reprise their roles as casting begins for “The Bigger Short”, the sequel to “The Big Short”.

2banana
2banana

"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."

Sechel
Sechel

@2banana your response comes off as a non sequitor

RonJ
RonJ

Wash, rinse, repeat.

Maximus_Minimus
Maximus_Minimus

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.

Blurtman
Blurtman

Just in time for President Eric “Place” Holder.

KidHorn
KidHorn

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.

Sechel
Sechel

the only difference between now and 2007 is the pervasiveness and the interconnections. we could easily go back, nothing structurally was fixed.

everything1
everything1

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.


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