Mortgage lender New American Funding is carving out a niche as a lender to minority and low-income borrowers by marrying manual loan underwriting that takes account of nontraditional credit and spending histories with efficient online technology.
The company seeks out borrowers whose credit history doesn’t fit the traditional banking industry’s mold. It employs a workforce that mirrors its majority Latino and African-American clientele and is well-versed in the challenges faced by those groups when they seek mortgages.
Let’s see how New American stacks up when it comes to mortgage lending.
AT A GLANCE
- Has 150 branch locations across the U.S. (except New York and Hawaii).
- Offers multiple down payment assistance and grant programs.
- Minimum FICO score: 620 for conventional loans; 580 for FHA and VA loans.
New American Funding’s key mission — and what drives its business — is helping minorities rebuild their wealth, particularly in the wake of the financial crisis that hit them the hardest, says Frank Fuentes, national vice president of multicultural community lending at New American Funding.
Here’s a complete list of its mortgage offerings:
- FHA, VA and USDA loans.
- Conventional and FHA renovation loans.
- Loan refinancing.
- Fixed-rate loans of 10, 15, 20 and 30 years.
- Adjustable-rate loans (5/1, 7/1, 10/1).
- Manufactured home loans.
- Bank statement loans.
With its manual underwriting model, Tustin, California-based New American Funding can look at each borrower’s financial picture more comprehensively than it would be able to by relying on automated models that don’t give lenders much latitude to consider nontraditional borrowers with unconventional credit histories, Fuentes says.
“That’s a huge advantage for us in working with underserved markets,” Fuentes says. “We take a ‘makes-sense’ approach to underwriting loans, whether it’s a purchase or refi, and we aren’t quick to deny a loan. We look at the customer’s profile from all different angles, which is unheard of today with bigger lenders and tightened restrictions.”
Fuentes says New American Funding mortgage loans offer competitive mortgage rates and low origination fees. The company charges a flat origination fee of $1,419 instead of the 1% of the sales price you often see in the mortgage process.
The company also aims for quick closings, in as little as 23 days for purchase loans and 30 days for refinances, Fuentes says. He attributes the speedy turnarounds to a lack of extra requirements, sometimes called overlays, added on to government loan programs by many lenders. The impact is particularly noticeable on FHA loans, Fuentes says.
New American Funding recently joined forces with Alterra Home Loans to offer a new pilot loan program using Freddie Mac’s low-down-payment Home Possible mortgages.
The new initiative, called Your Path, is geared at making homeownership affordable to a more diverse group of borrowers. Alterra and New American will adapt their underwriting models to consider borrowers who have seasonal work, are self-employed or live in multigenerational households where multiple members might contribute to paying household bills.
New American Funding seeks out minority and other underserved borrowers, who handle personal finance in ways that the U.S. banking industry has traditionally not supported, says Patty Arvielo, CEO of New American Funding.
For instance, Arvielo says, Latinos tend to save and pay for big purchases in cash, as well as pool money among multiple relatives living in the same household. Also, they generally fear and avoid debt, she adds.
The company’s diverse workforce gives New American a competitive edge, Arvielo adds.
“There’s data to support what we’re doing as a company, and just because some people conduct their financial lives differently than others doesn’t mean it’s wrong,” Arvielo says.
- Uses manual underwriting to evaluate creditworthiness.
- Offers full online mortgage application, rate quotes, document upload and loan tracking.
- Doesn’t have a mobile app.
- Services not available in all 50 states.
NerdWallet’s star ratings for mortgage lenders are awarded based on our evaluation of the products and services that lenders offer to consumers who are actively shopping for the best mortgage. The six key areas we evaluated include the loan types and loan products offered, online capabilities, online mortgage rate information, customer service and the number of complaints filed with the Consumer Financial Protection Bureau as a percentage of loans issued. We also awarded lenders up to one bonus star for a unique program or borrower focus that set them apart from other lenders. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.