The Housing Scene

Innovations in Mortgage Lending

Innovation is alive and well in the mortgage business, where Carrington Mortgage Services, NorthstarMLS and Privlo have all introduced new products recently. Even global property information and analytics firm CoreLogic is in the game.

Privlo, a venture capital-backed "alternative" lender, has financing for credit-worthy borrowers -- like former Federal Reserve Chairman Ben Bernanke, and even yours truly -- whose careers, lifestyles or finances are just too difficult for traditional lenders to wrap their heads around.

People with uneven or seasonal incomes, for example, should qualify. So should self-employed entrepreneurs, or borrowers with a single blemish on their credit records.

"Borrowers have changed dramatically in the last couple of decades," says Privlo CEO Michael Slavin. "There's an entire class of solo operators, freelancers, small-business owners and even just regular folks who are much more credit-worthy than their tax returns might show."

Slavin also says that folks in more traditional professions such as nursing and law are also being turned down "when in fact they are extremely well-qualified." All of these people are "positively contributing to our economy," he says, and should be able to buy a home just like the generations who went before them.

According to the Los Angles-based company, there are nearly 18 million independent workers nationwide, an indication that Americans are redefining what the typical career looks like. And small businesses account for some 90 percent of all U.S. businesses.

Privlo intends to reach these folks with a technology-based platform and business process that better qualifies them, taking into account a far greater number of factors than their personal history and future financial prospects. It also considers alternative documentation and "career-specific" factors.

The company is currently making loans in Idaho, Colorado, Texas, Tennessee, Maryland, Minnesota and Virginia, with more states on the way.

You can see if you are a candidate for a "Privloan" at privlo.com.

Carrington, meanwhile, says it is offering "a more transparent, simplified" lending process with no closing costs or upfront financing fees. The Santa Ana, California-based company, which has a national footprint, pays all the "eligible" upfront costs, and also covers any unexpected increases in estimated closing costs.

"Many underserved borrowers, including first-time buyers, still view the path to a mortgage as unattainable, complex and often cumbersome," says Executive Vice President Ray Brousseau. "The Carrington Loan simplifies the process and improves the experience to help remove the anxiety."

Earlier this year, the company lowered its acceptable FICO score to 550, and expanded its guidelines on a number of FHA, VA and USDA loan programs by extending eligibility to more property types and reducing add-on costs known as "overlays." It also developed a patent-pending online educational resource designed to improve borrower financial literacy.

The Carrington Mortgage is a government-insured loan program. Any upfront mortgage insurance or funding fees that may be required can either be rolled into the loan amount or paid in cash at closing. Borrowers will also be responsible for services they request -- such as rate locks or home warranties -- that are not required as part of the loan.

To find out more, visit thecarringtonloan.com.

NorthstarMLS's new program isn't for borrowers; at least, not directly. But its new True Lifestyle Cost tool will allow real estate agents to show their clients the true cost of home ownership, including costs that are often ignored or forgotten, such as commuting costs, utility bills and day care fees.

NorthstarMLS is a multiple-listing service used by more than 14,300 agents and brokers in Minnesota and Western Wisconsin. (It should not be confused with Lewisville, Texas-based lender Nationstar Mortgage.) The service says it is in the process of rolling out the true cost platform, and will make a variety of resources available to help agents learn how to use it.

CoreLogic's new CondoSafe database isn't for buyers directly, either. But it should help open up the stagnant condo market, in that it will help lenders and secondary investors more easily determine if a condominium project meets their criteria.

The Federal Housing Administration, for example, has all but banned condo loans. It will back mortgages in condo projects only if the property has cleared a certification process that examines budgets, reserves, insurance coverage, percentage of renters in the development and delinquencies on payment of condo fees.

Currently, lenders must identify and then query each condo association to ascertain whether the rules have been followed. "This can be a time-consuming 'chase and place process' that can stretch out the underwriting process and add $500 or more to the cost" of making the loan, says Arlene Hyde, a CoreLogic senior vice president.

And if the information they receive back is inaccurate or misinterpreted, the loan application could be rejected.

CondoSafe solicits and stores information from more than 140,000 condo associations. Initially, the program will provide lenders with alerts based on apparent conflicts with investor guidelines. But in the future, it will be able to compare data to historical statements and validate the information.

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