Carrington expands non-QM guidelines, citing sector growth

Carrington Mortgage Services is expanding the underwriting criteria for its Flexible Advantage non-qualified mortgage offerings, including lower the qualifying credit score for certain alternative documentation borrowers.

"As the non-QM market continues to grow, we continue to position ourselves, with expanded guidelines and competitive pricing, to capture more market share and add liquidity to the secondary marketplace," said John Vehlewald, vice president, head of Mortgage Lending Division marketing, lending strategy and optimization at Carrington, in a press release.

The change comes at a big time for both non-QM and third party origination sectors.

Competition has been increasing for mortgage brokers' business, as Evergreen Moneysource is the latest to launch a wholesale unit, BrokerBrand TPO. They join GO Mortgage and returnee loanDepot.

Among mortgage brokers, two of the biggest names, NEXA Lending and UMortgage, announced they were combining, as did GoRascal and Matador Lending. Real just completed its purchase of Remax, the parent of mortgage brokerage franchisor Motto Mortgage.

Meanwhile on the secondary market side, non-agency issuance year-to-date is $182 billion, with full year estimates of $256 billion, the latest Bank of America Securities report said. Last year, total issuance was $216 billion.

For non-QM alone, the $78 billion issued so far in 2026 is just shy of the $80 billion total done for all of 2025. B of A Securities is holding to a $100 billion full year non-QM issuance prediction.

Carrington too is growing, earlier this month completing its acquisition of Valon Mortgage, a servicer of approximately 810,000 loans; together the pair service approximately 2 million loans. The deal also creates a partnership with Valon Technologies for Carrington to use ValonOS as its core servicing platform.

Carrington also purchased Reliance First Capital from Tiptree. Reliance originates approximately $1 billion and services $3 billion. Its president and CEO at the time the deal was announced last October, Hugh Miller, was the former head of Delta Financial, one of the major players in subprime lending during its heyday.

In July, Carrington announced a partnership with artificial intelligence fintech Kastle.

It has been offering subprime products since 2018, an expansion of its focus on servicing lower credit score borrowers, Carrington said at the time.

Among the changes made to Flexible Advantage, eligible alternative documentation consumers can now qualify with a FICO score as low as 550. Another change expands eligibility to both experienced and first-time real estate investors who might not fit into what Carrington called "traditional" debt service coverage ratio criteria.

The guideline expansion also covers programs for self-employed borrowers.

"We have a responsibility to make loans available that are based on bank statements and other non-W-2-related financial documents to ensure all Americans have an equal opportunity to achieve their dream of homeownership, or purchase investment properties to secure their financial future, said Allison Arest, Carrington's executive vice president, lending, calling this an "industry first" in the press release.

"In addition to serving more potential homeowners, this important change gives brokers a greater range of options for customers they might otherwise have to turn away," Arest said.