Carrington Mortgage Services, LLC (CMS) announced today that its correspondent channel will now focus exclusively on underwriting and purchasing non-qualified mortgage (non-QM) loans.
The strategic shift underscores CMS’s commitment to serve a growing underserved segment of the mortgage market; borrowers who don’t fit the traditional lending mold.
This further cements the importance of non-QM lending, which has already grown considerably since inception and appears poised for even greater growth.
Why Carrington Is Going All-in on Non-QM
Non-QM lending has gained a lot of traction in recent years, while serving as a lifeline for borrowers who fall outside the strict guidelines of conventional mortgages.
Think self-employed individuals with fluctuating or difficult-to-document income, real estate investors leveraging property cash flow, or those with less-than-perfect credit histories.
At the same time, non-QM lending has buffered origination volume for struggling mortgage lenders as mortgage rates jumped from sub-3% to 8% in less than two years.
So both homeowners and lenders have benefited from these loans that offer flexibility where traditional qualified mortgages (QM) fall short.
It appears CMS is betting big on their potential to become an even larger part of the mortgage ecosystem moving forward.
“In recent years, one of the most successful loan products offered by CMS has been the non-QM, or non-agency, loan,” said Samuel Bjelac, SVP, Third Party Originations for CMS.
“As the non-QM market continues to grow, we have been positioning ourselves, with expanded guidelines and competitive pricing, to capture more market share and add liquidity to the secondary marketplace.”
Initially, non-delegated will remain the primary delivery method for approved sellers, but the company will soon expand to offer a delegated option as market conditions permit.
Andrew Taffet, CEO of The Carrington Companies, said “Being able to manage complex loans has long been one of our core strengths.”
“With margins tightening in the current market, one that is highly commoditized, it makes sense for us to best serve our correspondent partners by focusing our energies on building our non-QM business.”
In other words, Carrington is looking beyond the loans that every other bank and lender can offer with little differentiation, whether it’s a conforming loan backed by Fannie Mae, or an FHA loan.
That market has become increasingly homogenized and competitive, carving out a niche for lenders that choose to deal in non-QM instead.
What This Move Means for Borrowers (and Partners)
For homeowners and home buyers, CMS’s “Non-Stop Non-QM” approach translates to greater loan options and increased access to homeownership or investment opportunities.
Whether you’re a gig worker relying on bank statements to prove income, an investor using debt service coverage ratio (DSCR) loans, or someone with a unique financial situation, CMS is positioning itself as a go-to lender in this nascent space.
Their extensive slate of non-QM loan products offered directly to consumers, investors, and through mortgage brokers and bankers will be hard to beat.
And it will give them more ways to say “yes” when traditional mortgage lenders say “no.”
For example, CMS’s Flexible Advantage non-QM loan allows for credit scores down to 550 and even recent credit events like late payments and foreclosure.
Borrowers can also verify income with bank statements instead of tax returns and choose a product like a 5/6 ARM or a 40-year loan term, including interest-only options.
It could be a great fit for those who’ve been sidelined by rigid QM rules but still have the means to repay a mortgage.
CMS’s focus on non-QM isn’t just about expanding borrower access though. It’s about putting more business in its partners’ pipelines.
This will allow brokers and sellers to originate more refinance and home purchase loans thanks to their robust menu of non-QM offerings.
And the process is designed to be streamlined, while leaning on its underwriting strength to reduce risk for its partners.
That means confidently presenting non-QM options to clients, knowing CMS has the expertise to push loans through to funding.
Non-QM Lending Heats Up as Changes Are Afoot
CMS’s announcement comes at a time when non-QM lending is heating up.
With mortgage rates still high and economic uncertainty rising, more borrowers are seeking alternatives to the one-size-fits-all approach of traditional loans.
In addition, changes being made via the Trump administration could push more traditional lending into the non-QM channel.
This could mean that non-QM loans will no longer be seen as a niche product, but a vital piece of the overall mortgage pie.
For those of us here at NonQMLoans.com, this is an exciting development. And a clear sign that major players like CMS are recognizing the value of non-QM lending.
We expect non-QM to gain market share and become more of a household name for consumers as other players follow suit.