Carrington Mortgage Services LLC wants to boost lending to “underserved” borrowers with FICO scores below 640 — “a sizable market that is largely ignored by today’s lenders,” the company said today in announcing it’s loosening underwriting on FHA, VA and USDA loan programs, extending eligibility to more property types and reducing overlays.

Carrington Mortgage estimates that 1 in 3 consumers has a FICO credit score below 650, and now the company is prepared to OK mortgages to borrowers with FICO scores as low as 550, as long as they meet other requirements.

To allocate resources to serve underserved borrowers, Carrington Mortgage Services said it will eliminate conventional and jumbo loans from its wholesale product line on April 1, and limit its acceptance of wholesale submissions with FICO scores above 680. The company will make an exception for veterans, and continue provide VA loans “across the credit spectrum.”

More lenders are willing venture back into territory once considered “subprime,” as rising interest rates have put an end to the refinancing boom and lenders compete for a smaller pool of purchase loans, National Mortgage News’ Bonnie Sinnock reports.

National Mortgage News’ Quarterly Data Reports shows that, among the 15 lenders with the lowest minimum FICO scores, the average minimum during the last three months of 2013 was 571, compared with 599 a year earlier, according to National Mortgage News’ Quarterly Data Report.

Last month Wells Fargo announced it would make FHA loans to borrowers with FICO scores all the way down to 600, well below the previous 642 threshold, which got executives at Realogy and other real estate-related companies cheering.

In January, Bloomberg News reported that Wells Fargo was training a team of about 400 underwriters to make loans that don’t follow the new “qualified mortgage” guidelines for loans destined to be securitized and sold to investors. Wells Fargo said the company will keep “nonqualified” mortgages on its books, and that they could grow to account for 5 percent of the bank’s originations.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×