Getting a Mortgage Is Harder These Days

Alternatives for the Poor

For those who have less-than-perfect credit, there are still lending options available.

One is Acorn Housing Corp., a nonprofit group that provides free housing counseling to low- and moderate-income home buyers, and matches them with lenders.

Bruce Dorpalen, director of housing counseling at Acorn, said that people often overlook groups like his that can get them prime rates.

"A lot of people who should have gotten prime loans and people who could have gotten more flexible loans through us ended up getting very expensive loans through the subprime market, partly because that's what the mortgage brokers sales force sold, partly because the market doesn't always underwrite well low- and moderate-income home buyers," Dorpalen said.

Acorn does its own loan underwriting and then works with various lenders to get people mortgages. He said the credit scoring industry does not score low- and moderate- income people particularly well, but Acorn looks beyond the scores.

"At the end of the day, a lot of the people who would normally be subprime borrowers that are having a harder time getting a loan could get a loan through us," he said. "To us, it's a whole market distortion."

With more traditional, fixed-rate loans, poor borrowers are less likely to default because the cost of homeownership is significantly lower.

Generally, people come to Acorn because they know about the program, or are referred by a real estate agent, friends who bought a house through the program or local government. The group issued more than 15,000 mortgages last year and expects to exceed that this year.

"It's very frustrating," Dorpalen said, "to see all this happen and know that we could have gotten people a better deal."

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