FOR CARL BROWN

, a 36-year-old maintenance worker, the dream of home ownership almost became a reality last spring when he signed a contract to purchase a $100,000 three-bedroom condominium in an affordable housing complex just outside of New Orleans. But before he could close on his loan and move in with his 16-year-old daughter and two-month-old granddaughter, the credit crunch intervened.

With a 550 credit score, Brown had been pre-approved for financing in May. By August, as the subprime crisis gripped the mortgage market, his lender had tightened its requirements enough that his application was rejected. The same thing happened to a whopping 141 buyers also looking to buy condos at the "Gates on Manhattan" complex. In fact, of the complex's 144 two- and three-bedroom units on the market, only one closed.

So the project's developer, LeTriomphe Property Group, came up with a new plan: As of March 1, it started offering all previously-qualified home buyers a lease-to-purchase agreement that allows them to rent a condo for up to 18 months, with the option to purchase it as soon as they qualify for a mortgage.

To that end, all tenants who sign up must enroll in a credit-improvement program with the Neighborhood Assistance Corporation of America (NACA), a nonprofit consumer advocacy organization. Through one-on-one sessions with a counselor, tenants will work toward qualifying for a 30-year-fixed, no-down-payment mortgage offered by NACA and Bank of America. According to Shelley Sanders, office director for NACA New Orleans, the program has no credit-score requirements, but does require members to pay off collections accounts and show proof that they can afford the mortgage payments.

Brown, who thought the offer sounded too good to be true at first, moved into his new place last week and has his first meeting with the credit counselor later this month. "You can rebuild your credit as you live in your house," he says. "It's almost like they're giving it to you if you're able to maintain it."

Stuck with an ever-expanding inventory of unsold homes, property developers are discovering that finding a buyer is no longer enough. Now, they must find a buyer who can also pass lenders' ever-stricter financing requirements. In many cases, developers are so desperate that they're actually giving prospective buyers a helping hand, referring them to a credit-counseling agency or even offering lease-to-purchase agreements that allow individuals to rent a home until they qualify to buy it.

Stephen Ross, president of Montage Development, a Los Angeles-based home builder, says his company's four- and five-bedroom single-family homes in the San Fernando Valley have been attracting roughly 40 to 50 potential buyers on a typical weekend, but few, if any, qualify for a mortgage.

Not only have lenders increased down-payment requirements to 10%, but they now ask that buyers have three months' worth of mortgage and interest payments in an escrow account and have a credit score of at least 700 or 720. "That's precluding at least 75% of our buyers from buying," Ross says. "So one of the things we do as a development company is work on increasing their credit scores."

This would decrease one's credit utilization, which is one of the factors determining a credit score. Click here

Other developers, meanwhile, are seeking out companies to help implement lease-to-purchase agreements similar to the one LeTriomphe offered its tenants. Craig Roland, vice president of real estate and marketing with Crown Realty Advisors in Georgia, says he is seeing significantly more interest in these agreements from both tenants and home builders.

"A year ago everybody and their brother could buy a house and now they can't," says Roland. Five years ago, when he started facilitating lease-to-purchase agreements between home builders, investors and tenants, the typical buyer would have a credit score of 400 to 500. He's now working with people who have scores in the 600s.

Lease-to-purchase agreements can be a win-win situation for all parties involved, but they do carry risks, especially for tenants. In a typical contract, the potential buyer and the seller agree on a future purchase price for the home, usually with a sale date of within one to three years. A portion of the tenant's rent payments, known as a "rent premium," goes into an escrow account each month that the tenant will use toward down payment on a mortgage when they're ready to purchase the home. In some cases, the seller may also require an initial "option fee," which is 1% to 5% of the purchase price of the home and is also saved in an escrow account to be used toward a down payment.

For the prospective buyer, the risk is that they'll fail to improve their credit and will have to walk away from the deal and, consequently, any option fee and rent premiums they have paid. "Sometimes, buyers fool themselves into thinking that they're going to fix their credit, when they really don't," says Jack Guttentag, professor of finance emeritus at the Wharton School of Business who also runs a mortgage information site called mtgprofessor.com. "That's why the major risk of these deals is on the buyer."

If interested in a lease-to-purchase agreement, allow enough time to reasonably improve your credit. Most buyers prefer to sign at least two-year contracts, Guttentag says. By working with a reputable credit counselor, you can better the odds of creating a plan and sticking to it. Just make sure the organization you approach is a nonprofit organization and a member of the National Foundation for Credit Counseling. Many of the agencies certified to offer housing counseling by the U.S. Department of Housing and Urban Development also provide general credit-counseling services. Click here for a list.

To find maximum prices in your area, click here Membership in the program is $20 a year, according to Sanders, and all members are counseled individually. The loans, offered through lending partners like Bank of America and Citigroup, require no down payment, an interest rate at 1% below the going rate for a 30-year-fixed mortgage, and do not take into account credit scores. (NACA's lending partners have dedicated $10 billion to fund such loans.) Given the number of foreclosures and delinquencies across the country, the program has so far been successful: Currently, only 1.15% of its originated loans are more than 90 days delinquent and less than 0.25% are in foreclosure.