Fast-growing lender revamps its borrowing guidelines

While the full scope of upgrades is significant to his firm, Schiano noted, he ticked off a handful of the more notable developments.

“I think they’re all important, but if you take a look at the key things, we now allow people with lower credit scores to get up to 90% home equity,” noting that before borrowers with lower scores previously could only secure financing at 80% to 85%. “Even though there’s a lot of equity, there are some people who are good borrowers who don’t have as much equity,” the CEO explained. “The second thing we did is launch a bridge loan product that will help people when they’re buying new houses, and the third thing we think is really valuable, as people are fixing up second homes and investment products, is we now allow our second liens for investment properties and second homes.”

The investor loan aspect also looms large among the new offerings, Schiano said: “What we’ve done is making the product easier by allowing people to use a prior appraisal or use an AVM [automated valuation model], so it will basically get customers into loans faster, and save money they don’t have to pay for an appraisal – not in all instances, but in many instances.”

He explained the lack of risk aversion even while the firm is qualifying borrowers with lower FICO scores: “What we really key in on is borrower affordability and their debt loads to their income – so basically what we’re doing is lending to people who have shown the ability to pay and after going through their debts and debt ratio,” he said. “The difference sometimes between a 620 score and 640 score could be as small as paying off a minor debt or sometimes some of those customers just don’t have a lot of credit. And you see people’s experience allows some customers to boost their credit scores by bringing in utility bills. There are some 620 scores we won’t lend to – when there are prior bankruptcies and things of that nature – but there are a lot of good borrowers out there and we’re trying to make our product available to them assuming we think the loan is right for them and they can afford the loan. That’s really the important thing.”