The housing industry, rocked in the last several months by a plunge in sales, is finding business by turning to those previously shunned -- consumers with bad credit.
Just a year ago, bankruptcies, car repossessions and late or missed payments on other forms of credit were enough to immediately disqualify borrowers from getting a mortgage.
But the industry's slowdown over the past year, caused by steady increases in mortgage rates, has prompted mainstream real estate agents and lenders to give a second look at those who before stood almost no chance of owning a home.
"Lenders are focusing on first-timers and those with bad credit, identifying and working on different programs that will attract those types of buyers," said David McIlvaine, a real estate agent with Re/Max Advantage Realty in Ellicott City. "Since the buying population is diminished because of rate increases, we can spend more time working the harder deals to make them happen."
Agents and lenders even have started companies and created divisions just to handle would-be homeowners with poor credit.
In August, for instance, Prudential Home Mortgage, one of the nation's highest-volume mortgage companies, created a division just to woo borrowers who couldn't meet the company's usual lending requirements of solid credit, assets and employment.
Lenders aren't tossing out prudent standards, but they are working with consumers more -- acting as counselor, financial adviser or mediator between client and creditor -- to help resolve credit problems so they can obtain a mortgage.
"I don't think we will bear any more risk during this point in time PTC than we would in good times -- but at the same time, we have to work with what we get," said Ron Dyson, a loan officer with Fleet Mortgage.
"Generally, there are reasons. If the explanation is good and justifies them for a period of time, we feel safe to extend approval to that type of person," Mr. Dyson explained.
Their credit offenses run the gamut from excessive use of charge cards to missed car payments, even to foreclosures.
The industry says most of those problems result from loss of jobs, illnesses and divorces.
Just a year ago, mortgage applications from those consumers would have been automatically rejected in most cases. But the industry is courting them today out of necessity.
Sales of new and existing homes in the Baltimore region have declined eight straight months, and most in the industry anticipate little improvement through the year.
"Everyone wants to make more loans, and the rich people aren't the ones expanding the market," said Martin Wahl, director of product development for Equifax Mortgage Information Services Inc., a division of Equifax Inc. "The affordable-housing people are the ones expanding the market."
People like Barbara Robinson.
Nearly a year ago, she was denied a mortgage because she had missed payments for her car and charge cards and had taken out a personal loan.
But with her real estate agent's help, Mrs. Robinson wrote detailed letters to creditors and lenders explaining her problems and laying out a plan to pay off debts.
In February Mrs. Robinson was approved for a mortgage and moved into her first home, a spacious Randallstown rancher.
"It's a real good feeling," said Mrs. Robinson, 44. "It's exciting to know I will one day own a piece of America, a piece of the pie."
Lenders use their own scale of good and bad credit. The best rating -- "A" -- typically means no more than one 30-day late payment on a mortgage. Poor credit, scored B, C or D, means a more serious array of late or missed payments.
"We saw a lot of borrowers being excluded who were not really bad credit risks but didn't fit into the criteria," said Cathy Solomon, a Prudential vice president.
"Others have the money. They just forget and get overextended. They would eventually pay the mortgage back. We wanted to extend credit because it's an opportunity."
Lenders now believe that people who work themselves up to "A" grade will make their payments.
"Recent performance is much more significant than earlier performance," Mr. Wahl said.
Anthony Alston says he knows that to be true.
The real estate agent used to routinely turn credit-poor buyers away. About 18 months ago he opened Apex Realty Inc. in Baltimore and has worked with dozens of clients who had poor credit.
"I've gotten people into homes who've filed bankruptcy twice and lost a home in the process," Mr. Alston said. "They've had repossessions and lost five or six credit cards. Most people who've come to us who've gotten a second chance, they don't go bad again."
Re-establishing credit can take as little a month or as long as a year or more. The goal is to clear up outstanding liens and judgments and past-due bills.
"A lot of people think they don't have credit," said John Robb, a Baltimore loan officer with Fort Wayne, Ind.-based Waterfield Financial Corp. "Their rent is a piece of credit, so are utilities, cable and their gym payments.
"Though it's not spelled out as credit, they are showing responsibility in making a monthly payment, and we'll take that into consideration."
Even the Mortgage Bankers Association of America is trying to dispel the myth that a single late payment will disqualify borrowers, as part of a national campaign this year to boost home buying.
"People who've had bankruptcies in the past are able to get a mortgage today," said Andrew Trettin, a loan officer with Homestead Mortgage in Millersville.
"People who've had loans fall through, people who've been foreclosed on, can still get a mortgage," Mr. Trettin said.