In a way, yes. Some nontraditional mortgage lenders offer loans for the credit-challenged and with limited or non-existent credit histories. Because they are not as heavily regulated as banks, these non-bank lenders often have a faster and more convenient process that could take minutes.
A Look Into Nontraditional Mortgage Lenders
Traditional banks have been bound by stricter laws codified by the Dodd-Frank Act. Giant mortgage companies and banks have been feeling the sting of hefty fines, penalties and settlements in billions of dollars relating to the financial crisis. Inevitably, big banks are steering clear of transactions that are too risky for their risk appetite.
Of course, there’s a group of borrowers called millennials who weren’t so happy with how established banks acted during the Great Recession. Engaging these millennials has been a fascinating study in the financial industry.
Stricter regulations, curbed risk appetite, plus millennial distrust, have spawned nontraditional lenders that have been the alternative to traditional banks and what they stand for.
Why Nontraditional Mortgage Lenders
Nontraditional lenders are loosely classified as mortgage marketplaces/platforms, mortgage brokers, online mortgage lenders, and non-bank lenders.
What these alternative lenders offer are:
Marketplaces and mortgage brokers serve as middlemen, connecting borrowers to lenders through their online sites. These online marketplaces facilitate a more hassle-free way to shop for rates. They will collect your information and match you with a potential lender who will originate your mortgage. Some mortgage brokers also help you go through the process of getting a loan.
Going direct to the source, online mortgage lenders are a click away. Making use of secured connections to gather information from borrowers and analyze them for underwriting, some online loan originators can hand down an “approve” or “reject” in a matter of minutes.
With fewer regulations than banks, non-bank lenders are more lenient in dealing with borrowers with not-so-good credit. The most notable non-bank lenders are credit unions.
These cooperatives and not-for-profit organizations provide more flexible products to their members often at lower rates than banks. To be clear, credit unions are still bound by rules and regulations of the National Credit Union Administration.
Nontraditional mortgage lenders have maximized the use of technology that has made them closer to the next-generation of consumers. Notwithstanding the ease and speed offered by their automated systems, there are still things in the loan process that require face-to-face interaction with loan officers, attorneys and more. The actual loan timeframe will depend on how much you are going to borrow, your personal circumstances, etc.
Still, borrowers who have been shut out of the conventional loan process have varied options, both traditional and alternative, in looking for home loans and even auto loans, personal loans and credit cards.