Understanding credit key to mortgage approval

THE FLINT JOURNAL
Sunday, July 18, 2004
By Melissa Burden

Tracie Kelly of Flint got a mortgage through Bank One this spring, but not until she went through counseling.

That's homeownership counseling, in Kelly's case at Salem Housing Community Development Corp. in Flint.

"I didn't think I would qualify (for a mortgage), because I am middle-class income," said Kelly, 33, who is black and works as a press operator for Lapeer Metal Stamping. "I'm a single parent. I had some debt that I thought was too high. I had filed bankruptcy and everything."

But she bought her first home in March, a three-bedroom two-story on Flint's north side.

Kelly said she believes blacks tend to know less about the mortgage process and that's why they are denied more.

"The whites get educated and someone told them how to do it," she said. "It takes knowledge and education. That's the only reason."

Lenders and those working to help more minorities buy homes say she's right, and that there are ways to raise the number of black homeowners:

Arming prospective home buyers with knowledge.

Getting lenders to give applicants a second look.

"I don't see it as race," said Amanda Crews, director of homeownership initiatives at Metro Housing Partnership in Flint, a housing counseling agency. "It's the information."

Generally, mortgage lenders look at an applicant's ability to repay a loan, evaluating income and employment history, outstanding debts and payment history on debts. Credit reports and scores also are usually reviewed.

Top local lender ABN AMRO Mortgage Group of Standard Federal Bank agreed that nontraditional ways of evaluating prospective borrowers can boost the number of approvals. The lender had the most home mortgage applications in the county in 2002 and also the most applications for homes in minority neighborhoods among top lenders.

"Sometimes we'll look at their history of making their utility bills on time or their rent on time, and sometimes those things might not end up on a credit report," said Mary Fowlie, a Standard Federal senior vice president.

"Everyone is given an opportunity to explain what's on (a) credit report," added Gloria C. Banks, a Citizens Banking Corp. vice president.

On a case-by-case basis, Citizens may overlook items such as unpaid medical bills on a credit report, Banks said.

And then there's education and credit repair.

LaQuita Taylor of Flint, initially quoted an 11-percent interest rate at a Flint Township mortgage office, said success in home-buying requires knowledge, especially for minorities.

"They figure you come in and you don't have any education of buying a home and they take advantage of you," she said.

The Northwestern High School graduate took a class on real estate to learn the jargon, but still was denied a mortgage by another Flint Township lender because of unpaid medical bills on her credit report, she said.

The lender referred her to Metro Housing, where she attended a home-buying class and paid off an $1,100 medical bill. She will close on a Citizens Bank mortgage this month.

That's a longer-term goal for Randle Thomas, 52, of Flint. He stopped by Fifth Third Bank's Homeownership Mobile - a converted bus that serves as a traveling mortgage office - in Flint last month to obtain a free credit report "to try to clear it up and be in a position to own a home."

The DaimlerChrysler assembly line worker found he has an unpaid cellphone bill and medical bills that insurance didn't cover. He said he plans to go to Mission of Peace Housing Counseling Agency in Flint for help and aims to own a home in a year or two.

Actions such as that are the key to improving minority homeownership, said Doris Thomas, vice president for community development and a market officer for Bank One's East Michigan region based in Flint. Among top area lenders, Bank One made loans to the highest percentage of blacks who applied in 2002: 79.4 percent.

"If we can get people to understand credit," Thomas said, "then I think the battle is won.

Home Loans Articles, Mortgage Loans Articles, Financial News