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Carrington Mortgage Services has created a nondelegated correspondent channel, looking to build on relationships it has with originators that currently broker loans to the company.
“A lot of the brokers we deal with in the wholesale channel also do correspondent business, but they’re doing it with others right now and we thought, ‘Well, why not us?'” said Carrington Executive Vice President Rick Sharga in an interview. “We have very good relationships in that channel.”
Carrington specializes in working with credit-challenged borrowers. Through October, it has originated $2.2 billion in its retail channel and $2 billion in its wholesale channel. Carrington had retail volume of $3.3 billion and wholesale volume of $2.4 billion.
“We’re committed to delivering a high level of transparency and timeliness to the nondelegated correspondent lending process,” said Carrington President Ray Brousseau in a press release. “We understand that it’s all about providing our originators with the ability for further growth and profitability.”
Earlier this year, the company introduced a line of non-qualified subprime mortgage loans to its government-insured product menu.
Besides those loans, Carrington will purchase Fannie Mae, Freddie Mac, Federal Housing Administration and Veterans Affairs mortgages.
Carrington has “as broad a suite of products as anybody in the industry. We’ve been doing FHA since we started, and there are a lot of products available for credit-challenged borrowers in the FHA product suite that lenders just don’t offer,” Sharga said.
The non-QM loans are underwritten manually because those borrowers don’t do well in an automated underwriting system environment. “If you have an experienced underwriter who knows what he or she is doing, they can find ways to help a borrowers qualify for some type of loan that’s in that portfolio,” Sharga said.
The reality is nobody but a “perfectly qualified borrower” will get their loan accepted via an automated underwriting process, he continued. Ultimately, the mortgage industry will start building more artificial intelligence into its underwriting engines that will allow the systems to look for those responses, but it is not there yet.