Maurice Grant said he just wanted to buy a house for his two children and wife Crystal, who was pregnant with twins. He recently returned to his high school, R.B. Stall, as a teacher and track coach while working part time at a local supermarket.
To buy a home, he went through traditional channels, working through a real estate agency and Bank of America to secure a mortgage.
Grant's real estate agent found a good choice, a roomy home in the Forest Hills neighborhood near a relative for $143,000. Everything looked like a go this spring, but the bank informed Grant on June 7 through a community development officer in Charlotte that he would be turned down.
Bank officers initially had been encouraging, Grant said. They sent him promotional materials about a U.S. Department of Housing and Urban Development-endorsed "Community Commitment Program" that touted 100 percent financing for first-time home buyers. The program said it could offer flexible credit guidelines, consider nontraditional credit and undocumented income and provide lower-than-market interest rates. provide lower-than-market interest rates. Certain that they were moving, the Grants packed up all their belongings in the apartment they rent while notifying the landlord of their plans. "I have people calling me now," he said. "I'm scared to answer."
Grant, who earns about $27,000 from his teaching job and a total of more than $30,000 when including his part-time work, said his dream of owning a home has turned into a nightmare. The Grant family's case points to a troublesome issue in the slumping housing market, where working-class families are being turned away by lenders because of tightened credit policies in the industry as a whole.
As recently as 2005, borrowers with poorer credit could often secure mortgages through so-called subprime lenders with relaxed criteria. As a trade-off, subprime lenders charge higher interest rates and in some cases stiff fees, which end up costing borrowers more money. Some of those borrowers face foreclosure. Locally, many of those borrowers were black.
A study last month from a national advocacy group said the Charleston-North Charleston metro area had the nation's worst gap between mortgage costs for white home buyers and minority home buyers, who paid nearly double. Greenville had the nation's 10th worst.
In response, Sen. Robert Ford, D-Charleston, sponsored a "mortgage disparity" public forum last month.
After the subprime market took a beating when home prices and sales began sliding, the government developed and expanded home loan programs. But affordable housing advocates say those programs haven't been flexible enough to lend money to people on tight budgets.
The North Charleston branch of the National Association for the Advancement of Colored People is involved with housing issues in the city and is familiar with Grant's case, branch President Mary Ward said. In some cases, Ward said, a lack of education about the borrowing procedure may be a reason for rejections.
The NAACP can help educate potential home buyers or homeowners, Ward said, and it can help file complaints with the lender or regulatory agencies.
It's unclear exactly what happened with Grant's loan application. His credit score wasn't in the range that would have triggered an automatic rejection. Some involved said there were worries about an outstanding $20,000 student loan from his college days at Francis Marion University. Others said he was granted a "forbearance" that waived student loan payments as a condition of the mortgage for three years. Also, there were questions about the income from Grant's second job since it's part time.
Harry M. Smith, executive with Bank of America Mortgage in Charleston, referred questions to bank lawyers. Debra Robinson, with HUD in Atlanta, couldn't be reached for comment.
Anthony Bryant, broker-in-charge of North Charleston-based Port City Services real estate and financial company and an affordable housing advocate, said a problem is the mega-bank mergers of the 1990s. "All (borderline) decisions are made outside of South Carolina," he said.
Most banks offer programs on how to buy homes and apply for down payment assistance, and Bank of America notes on its Web site that it has a program to assist first-time home buyers who are teachers. The program that Bank of America pitched to Grant, for instance, requires as little as $500 from the home buyer, permits closing costs to come from a gift and offers free home-buyer counseling.
"We are fortunate that some of our local banks (have) some special offerings," said Mary Girault, a spokeswoman with the Charleston County School District. "We try to communicate that with them (the district's teachers)," she said, "but it's a major stumbling block as a district (in recruiting) when the real estate is so pricey."
The city of North Charleston has extended an employee home-buying assistance program to teachers. Under its program, workers are loaned $5,000 toward down payment costs and are forgiven $1,000 a year for each year they work.