For most Americans, declaring Chapter 7 bankruptcy or losing a house to foreclosure can make it impossible to get a home mortgage for at least two years.
Not for State Rep. Darryl Rouson of St. Petersburg.
While Rouson was still in bankruptcy proceedings and facing the forced sale of one house in 2003, he got a $263,150 loan from Cornerstone Community Bank to build a 4,400-square foot home. Of 366 mortgage loans Cornerstone made to individuals in Pinellas County that year, Rouson's loan was the only one to a borrower in bankruptcy, public records show.
Did he get preferential treatment?
"No,'' said Rouson, 53, a hard-charging attorney and past president of the local NAACP.
Others are not so sure.
"Certainly the average citizen wouldn't be able to do that,'' said Ernest Williams, a former St. Petersburg City Council member who lost to Rouson in a special March primary for the District 55 House seat.
"It gets to the heart of where we are today with all the concerns about the market, about the housing crisis and about how certain people have gotten special privileges where others are not in the same position to do that,'' Williams said.
Rouson, a Democrat who represents parts of Pinellas, Hillsborough, Manatee and Sarasota counties, became one of St. Petersburg's best-known and controversial community activists after beating a longtime crack cocaine addiction. His road to redemption, he said, was paved with the help of people who "not only believed in me but believed in our community.''
"I am a perfectly made imperfect human being, and I do not believe voters expect perfection of their leaders as much as they expect ownership of difficult times,'' said Rouson, who faces a write-in candidate Nov. 4. "I certainly have had some difficult times.''
From 1987 to 1997, Rouson ran up a $359,069 debt to the IRS, which put a lien on his house on 58th Avenue S. Rouson stopped making payments in October 2002 so the lenders would foreclose and take back the house, thereby freeing him from the IRS lien.
"He could never get rid of the IRS as long as he stayed in the house,'' said G. Barry Wilkinson, a business lawyer who represents Rouson.
At the same time in 2002, Rouson declared Chapter 7 bankruptcy, listing assets of $134,000 — primarily his home — and debts of $522,102, including the unpaid taxes and two mortgages on the house.
Chapter 7 gives people with few assets a fresh start financially. A typical Chapter 7 case takes two or three months for assets to be liquidated and the debtor to get a court-ordered "discharge'' from most debts.
Rouson's case, though, dragged on for over a year. The court-appointed trustee who administered his case requested an extension of time to investigate "whether or not the debtor (Rouson) failed to disclose assets.''
While Rouson was still in bankruptcy, his foreclosed house was sold and he and wife, Angela, bought a lot in a new subdivision off 31st Street S in St. Petersburg. The developer cut the $54,000 price in half in exchange for legal work.
The couple also got a $263,150 construction mortgage from St. Petersburg-based Cornerstone Community Bank, founded in 1998 by Robert "Skip'' Carr.
Rouson said 10 other banks turned him down before Carr — who recently died — made the loan because Rouson already had borrowed from Cornerstone. "I was trying to build a law practice, and when you build a law practice you have a banking relationship,'' he said. "Skip Carr gave me $37,000 and I paid it off. I've never defaulted on a loan to Cornerstone.''
Cornerstone executives would not comment on Rouson's loans, but said the bank deals with borrowers individually. "The loan decision is more than just one analysis of risk,'' said David B. Ray, senior vice president.
Under Fannie Mae lending guidelines, banks normally won't make mortgage loans for at least two years after the borrower's discharge from debt. Giving a substantial loan to someone still in Chapter 7 proceedings is virtually unheard of, according to experts who were not familiar with Rouson's situation, but commented in general terms.
"It's something I have never seen," said David Feaster, a banker since 1976 and area president of Whitney Bank.
Gary Carnal, a St. Petersburg lawyer who represents debtors, was also surprised. "From a lender's perspective, I don't see how anyone would loan money to someone who's still in bankruptcy,'' he said.
Lawyer George Rahdert, who also has borrowed from Cornerstone, once rented office space and a house to Rouson, whom he described as a "very good tenant'' who paid his rent on time and took care of the property.
"My assessment of the credit situation is that his bankruptcy addressed problems he had in his distant past and that just sort of clung to him,'' said Rahdert, who represents the St. Petersburg Times on First Amendment issues. "He's got a reputation in town for paying his bills and being a constructive member of the community.''
As the local NAACP president, Rouson often criticized white-owned businesses for not having any African-Americans on their boards. He acknowledged pressuring Cornerstone to diversify its board.
"Over and over again I asked the late, great Skip Carr if he would do so,'' Rouson said. "He told me he was working on it, but there were some challenges.''
On Dec. 23, 2003, Rouson got his discharge from debt after the Chapter 7 trustee concluded there were no assets to distribute to creditors. The Rousons moved into their new home four years ago and refinanced it with a $564,000 adjustable rate mortgage from Cornerstone at a current rate of 7.375 percent.
The two-story pool home was worth $710,000 at the peak of the real estate boom, Rouson said, but is now assessed at $480,000. Rouson said he is confident he will be able to make the payments even if the rate goes up: "I just got to work hard.''
As for getting a big loan while in bankruptcy, Rouson acknowledged it was unusual, but "not illegal, unlawful or violative of certain bank polices."
"If my life can continue to demonstrate that there is life financially, professionally and emotionally after (bankruptcy)," he said, "then so be it.''
Times researcher Carolyn Edds contributed to this report. Susan Taylor Martin can be contacted at firstname.lastname@example.org