It doesn't matter whether you goofed around with your credit or had a bad break beyond your control. Either way you are paying the price with a poor credit history and higher interest rates on loans you are able to get.

Now you want to change the past and take on the joys and responsibilities of home ownership. You've done some growing up, but your credit may still be having growing pains. What are your options? Give up? Wait for the seven-year broken mirror to mend? Or take matters into your own hands and refuse to give up your dream?

Good. I'm glad you decided to fight for your dream. Because nothing will make you hold your head up like being the proud owner of your own home. So what if you have to pay a little more for the privilege? It's worth it in terms of building equity, not to mention self-esteem, and your higher mortgage interest is as tax deductible as the most credit worthy citizen's.

The first thing to recognize is that you are not alone. Despite being in a record economy, bankruptcies and defaults on credit cards and other loans are at an all time high. But there is one debt that most borrowers will move heaven and earth to preserve and that is the loan on their homes.

Lenders know this and some are becoming more debtor friendly. They know that it takes two incomes to live at the standard of the previous generation. They know that credit is all too easy to get and that it is far too easy to get in over your head. With the recession of the 90's as a recent lesson, lenders also know that bad things like downsizing, lay-offs, catastrophic illness and other problems happen to good people. The recent spate of El Niño disasters - fires, floods, droughts and earthquakes have also taken their toll on the nation's borrowers. In other words, you may be financially better off now, but your credit may still be recovering from an event that may have happened years ago.

Until now, mortgage brokers have been the best people to have in your corner when you are trying to buy a home with less than perfect credit. With one search fee to cover the credit report, usually $50 to $75, they are empowered to scour numerous lenders to find you a loan that works.

Now a direct lender is stepping up to the plate. Countrywide is one of the first direct lenders to take a new attitude toward marketing to good people with bad credit by introducing a new family member - Full Spectrum Lending .

For those customers who are interested in repairing their credit, Full Spectrum offers a unique product called the Credit Repair Mortgage. According to the site, this program "provides borrowers with the stability and predictability of a fixed-rate mortgage for the first 2 or 3 years. During this low monthly payment period, you can begin the process of restoring your credit. If you've proven your creditworthiness at the end of the fixed-rate period, you may qualify for a conventional mortgage loan at a lower rate. Best of all, you can be rebuilding your credit while making mortgage payments on your own home with minimal up-front costs and low monthly payments."

Sound too good to be true? It is, but it isn't. Countrywide is simply capitalizing on an underserved market. It also might become the only game in town for many buyers.

According to Dick Lepre, president of Homeowners.com, a leading mortgage brokerage site, "there is an entire sub-industry devoted to the "B paper" market."

"People do not do this out of any altruistic spirit but because the rates are high and it had been very profitable," says Lepre.

"About three months ago everything changed. The ratings of the bonds that back these loans plummeted. At least half of the retail lenders in this industry disappeared," explains Lepre. "The "story" is that there will still be a "B paper" market but it will not be as "thick" as the previous market. Fewer people will get loans."

As the nation's largest direct lender, Countrywide has the power and ability to capture the "B" paper market if it wishes. But there are other options for borrowers as well.

Published: January 12, 1999

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