Low-income mortgage aid available Program will help high-risk applicants

February 28, 1993|By Adriane B. Miller | Adriane B. Miller,Contributing Writer

If you have a poor credit history and a low income, but are really ready to buy a house, the country's fourth-largest bank may have money to lend you.

NationsBank and the Real Estate Center for Affordable Housing in Baltimore have announced a program to help people who would usually be considered "high risk" for a mortgage.

Mark Swancy, senior vice president of Charlotte, N.C.-based NationsBank, said the bank is issuing secured loans for as much as $3,000 to qualified people who are enrolled in the center's "Credit Changers" program.

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Here's how it works:

* Baltimore-area residents who do not yet own homes pay $40 each to become members of the Real Estate Center and take part in its credit and homeownership counseling. They learn how to improve or establish credit, retire old debts, the responsibilities that come with buying a home and how to make themselves more attractive as bank customers.

* Members then may apply for a NationsBank secured loan. Applicants must show at least one year in their current job or the same line of work, one year in the the same residence, an open checking or savings account, a minimum household income of $15,000, and other qualifications. They must also have no debts older than 90 days or show they have worked out payment arrangements with creditors.

* If an applicant meets the requirements, NationsBank issues a certificate of deposit in their name and holds it in the bank. Participants pay proceeds on the loan for as long as a year, and the bank pays them interest on the balance.

* When they have paid the full amount of the loan, participants get the money in the CD and a positive payment history. They may use both to apply for a mortgage, either with NationsBank or another lender.

A future customer?

Mr. Swancy said NationsBank loan officers look for people who are ready to buy homes but who simply need to get their credit in order.

"Most of the time they have what's necessary to buy," he said; namely, the willingness to commit to the responsibilities of a home and a mortgage. "They just may not have the 20 percent down payment, and they may not have a lot of credit. Or if they don't have good credit, they [are working] to get back on track."

Mr. Swancy said the program is not risky for the bank, "not if it's secured by proceeds of the loan. . . . If all goes well, we help them accomplish their goal, and quite possibly we have a future customer."

Charles Jeffries, executive director of the Center for Affordable Housing, said NationsBank has not set a dollar figure on the loan program.

"They are committed to doing as many loans as we can give them," Mr. Jeffries said. He said the money is part of a $10 billion, 10-year lending plan NationsBank established for low- and moderate-income areas in states where it operates.

Mr. Swancy said it is too soon to tell if the program will be successful.

"We've had a short relationship with the center so far," he said. "Charles approached us last summer and we did a pilot for 90 days. There hasn't been a whole lot of activity since."

Mr. Jeffries said 10 people have gone through the program. So far, seven are now homeowners and three have gotten mortgages with NationsBank.

NationsBank isn't the only bank that works with "high-risk" customers. Provident Bank conducted a similar secured loan program last year in Baltimore to help residents improve their credit history or qualify for home loans. And a spokeswoman for Maryland National Bank said the bank conducts about 50 credit workshops for individual consumers each year.

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