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6 | TH E M REP O RT TAKE 5 Opening More Doors to Mortgage Credit— Without Breaking Them Down M // In 2014, a handful of lenders—including Carrington— developed programs aimed at securing mortgages for borrowers with lower FICO scores. That was followed by a push for low down payment offerings. With these barriers to homeownership slowly coming down, what major hurdles still remain in bringing more potential homebuyers to market? What else can lenders do to help would-be buyers? MANINANG // Making home- ownership a possibility for the underserved market—which includes first-time homebuyers and borrowers with a challeng- ing credit history—is a priority for Carrington, and that is why we developed programs that offer affordable mortgages to borrow- ers with lower FICO scores and smaller down payments. Our minimum credit score require- ment has been lowered to 550, and our guidelines have been expanded and overlays reduced on a number of programs popular with first-time homebuyers, like FHA, VA, and USDA loan programs. But creating those pro- grams is just the first step toward lowering the barriers to home- ownership. Often the underserved market thinks that homeowner- ship is simply out of reach, and they are unaware of the different options that could make it a real- ity for them. We want to make sure that potential buyers know about these programs and that real estate and mortgage profes- sionals also are aware of them so they can inform their clients. Another element of the lending process that we're focusing on is education, transparency, and simplification. We want to make sure that borrowers understand their own financial situations and how a mortgage might fit into their budget. To that end, we cre- ated The Carrington Loan, which offers borrowers a simplified and more transparent mortgage op- tion. A mortgage is still viewed as something unattainable by many underserved borrowers. They consider it complex and cumbersome, and to be fair, in many instances, it can be. That's why we wanted to create The Carrington Loan, which is unique because it offers a mortgage with no closing costs, appraisal fees, or upfront financing fees. Carrington also pays all eligible loan costs as lender credits, and if any unan- ticipated lender costs come up, Carrington issues a credit to cover them. This really simplifies the process and helps eliminate some of the anxiety that comes with getting a mortgage, especially for those who don't have cash readily available for closing costs. With The Carrington Loan, there is no need to modify the rate after it is presented to the borrower to offset loan costs and loan closing fees, and unexpected increases to estimated closing costs are not an issue. Removing these types of barriers really takes some of the pressure out of the situa- tion for underserved borrowers who thought that the dream of homeownership was out of reach because they didn't have a lot of cash to bring to the table. M // Are you concerned that opening up mortgages to borrowers who previously couldn't afford homes might spark another financial crisis? Are you, and other lenders, putting any safeguards in place to make sure that doesn't happen? MANINANG // When you look at lowering barriers to home- ownership, the first thing you have to consider is affordability through the down payment. Then, you must review the credit score guidelines associated with the loan. And once you consider lowering credit require- ments, there are worries about a repeat of the subprime crisis. It's a legitimate concern, and we think there is a responsibility on both sides to ensure the financial crisis is not repeated, while still making homeownership more accessible to qualifying individu- als. We accomplish this today through our government-insured loan programs, which are fully documented and allow us to consider the borrower's complete qualifications. It's important to point out that our commitment to the under- served market doesn't begin and end with lower credit require- ments. We want to create a healthy and thriving mortgage market, and we want our bor- rowers to succeed. Serving the underserved community means not only offering loan products that work within their financial With origination volumes on the decline and U.S. homeownership touching a 20-year low, lending leaders and policymakers have readjusted their aims to focus on lower-cost, lower- credit mortgages. Rey Maninang, SVP and national sales director for Carrington Mortgage Services, sat down with MReport to discuss his views on responsible ways of making mortgages more accessible. Here what this industry veteran with more than two decades of experience had to say