MountainView To Invest In Nonprime Mortgages

To give lenders greater incentive to go after the ‘underserved’ market, MountainView Management Co. is now investing in nonprime residential mortgages.

Through its new Peak Program, MountainView plans to purchase residential mortgage loans to borrowers that are creditworthy but not able to meet current prime mortgage requirements.

In a release, MountainView says it is launching the program to counterbalance the effects of lenders' tighter underwriting policies. Many lenders now have overlays in place to help safeguard against the increased risk of loan buybacks – but, in the meantime, the U.S. government is pressuring lenders to loosen up more credit to lower-income borrowers.

MountainView says it will only be buying high-quality, nonprime mortgages from traditional and specialty lenders in correspondent relationships. The 30-year fixed- and adjustable-rate loans will be to borrowers with FICO scores in the mid-to-low 600s and will feature loan-to-value ratios up to 80%. The loan amounts can be as high as $2.5 million.

All loans acquired will be held in portfolio, more specifically, in MountainView's Mortgage Opportunities Fund III.

Art Yeend, managing director and head of sales and marketing at MountainView Capital Holdings, says the company is looking to buy loans that are specifically targeted to individuals who ‘recently completed bankruptcy; lost homes to foreclosure, short sale or deed-in-lieu; are real estate investors, corporate borrowers or foreign nationals; or are non-W-2 employees.’

‘These borrowers will be prudently and responsibly underwritten and will meet all ability-to-repay guidelines,’ Yeend says.

Yeend points out that many of these borrowers ‘experienced life event hardships from lost businesses, lost jobs, divorces and/or illnesses’ during the recession.

‘As time has passed and the economy has improved, many of the affected borrowers have now recovered financially, but do not qualify for conforming or jumbo prime loans,’ he explains. ‘Additionally, due to losses suffered during the crisis, credit has been restricted and many self-employed borrowers who previously relied on alternative income documentation programs face similar credit qualification challenges.’

The program is expected to launch in late October. Underwriting guidelines and interest rates will vary by state.


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