Carrington Launches Subprime Mortgage Lending

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

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. 1-25
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).