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Bank Of America Affordable Loan Solution Mortgage – A pedestrian walks past a Bank of America ATM in San Francisco on January 23, 2020. Getty Images File via Alex Tai/LightRocket
Bank of America said it is offering zero-down, zero-closing-cost loans to first-time homebuyers in a select group of cities to help increase homeownership among black and Hispanic/Latino communities.
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This option will first be available in select neighborhoods in Charlotte, Dallas, Detroit, Los Angeles and Miami. The new mortgage, called the Community Affordable Loan Solution, aims to help qualified individuals and families obtain affordable loans to purchase a home, the bank said.
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A bank representative said applicants do not need to be black or Hispanic to qualify for the product.
“Homeownership strengthens our communities and can help individuals and families build wealth over time,” AJ Barclay, head of neighborhood and community lending at Bank of America, said in a press release. “Our community affordable loan solution will help more Black and Hispanic families achieve their dreams of sustainable homeownership, and is part of our broader commitment to the communities we serve.”
The loans do not require mortgage insurance; Buyers who deposit less than 20% of the purchase price are typically charged an additional fee and there is no minimum credit score. Instead, eligibility will be based on factors like prompt lease payments and on-time service, phone and car insurance payments. Potential buyers must also complete a homebuyer certification course offered by Bank of America and its federally certified housing counseling partners before applying for the loan program, the bank said.
The racial gap in homeownership in the United States remained significant in 2020, the last year for which National Association of Realtors data is available.
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The homeownership rate for white households was 72.1%. This rate is 51.1% for Hispanic households and 43.4% for black households. NAR said the black homeownership rate was lower in 2020 than in 2010.
“Rising home prices and lower housing supply during the pandemic have disproportionately impacted black households more than other racial/ethnic groups,” NAR said in a report. White households are now 40 percent more likely to purchase a home than black households, the association said.
Other major financial institutions, such as Bank of America and Wells Fargo, have a checkered history of lending mortgages to people of color and potential disabled buyers.
Countrywide Financial, the subprime lender that Bank of America acquired in 2008, was fined $335 million in 2011 for charging black and Hispanic homebuyers higher interest rates than white applicants.
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In 2012, Wells Fargo agreed to pay $175 million to resolve allegations that it targeted people of color with overpriced, risky home loans. The city of Miami also sued JPMorgan Chase in 2014, accusing the bank of making problem loans to communities of color. Bank of America has introduced a new zero-down, zero-closing-cost mortgage solution for first-time homebuyers that will be available in select markets, including Charlotte in Los Angeles, Dallas, and select Black/African American and/or Hispanic neighborhoods in Detroit. announced. and Miami. . Rick Moriarty | syracuse.com
The new loan will be available in designated markets with a focus on serving Black/African American and/or Hispanic neighborhoods.
The company’s community affordable loan solutions will use loan guidelines based on factors such as current rent, utility bills, phone and car insurance payments. It does not require mortgage insurance or a minimum credit score.
Individual eligibility depends on income and place of residence. Potential buyers must complete a homebuyer certification course provided by select Bank of America and HUD-approved housing counseling partners before applying.
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“Homeownership strengthens our communities and can help individuals and families build wealth over time,” said AJ Barclay, head of neighborhood and community lending at Bank of America. “Our community affordable loan solution will help more Black and Hispanic families achieve their dreams of sustainable homeownership, and is part of our broader commitment to the communities we serve.”
According to the National Association of Realtors, the cost of buying a home is now nearly 80 percent more expensive than it was just three summers ago. In addition to higher prices, mortgage rates have also increased as a result of the Federal Reserve increasing interest rates.
Mortgage rates have nearly doubled from a year ago, according to Freddie Mac. On September 1, the 30-year rate was 5.66% and the 15-year rate was 4.98%.
A competitive housing market has made affordability a top concern in the real estate industry. According to NAR, it also widened the racial gap between black and Hispanic homebuyers; Their mortgage application is 7 percent more likely to be rejected than their white counterparts.
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There is a nearly 30 percentage point gap in homeownership between white and black Americans. Black Americans’ homeownership rates are lower than they were in 2010, according to NAR.
Hispanic buyers have experienced record growth in the housing market, with Hispanic homeownership at a record high and above 50% for the first time.
In 2011, Bank of America agreed to pay $335 million to resolve allegations that the Justice Department’s domestic finance unit charged nearly 200,000 qualified black and Hispanic borrowers higher rates and fees “regardless of their race or national origin.” The New York Times reported.
The bank launched its community homeownership commitment in 2019, offering down payment and closing cost options. The goal is to help 60,000 individuals and families buy affordable homes by 2025.
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To date, more than 36,000 individuals and families have used this program. Bank of America has provided more than $9.5 billion in low down payment loans and more than $350 million in nonrefundable down payment and/or closed value grants.
To date, two-thirds of loans and grants awarded through the Community Homeownership Pledge have helped multicultural customers achieve homeownership, according to Bank of America.
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CHARLOTTE, N.C. – To help encourage homeownership, Bank of America is offering zero down payment, zero closing cost loans to first-time homebuyers and black and Hispanic communities in a select group of cities, including Charlotte.
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Bank of America is offering the new option in select neighborhoods of Charlotte, Dallas, Detroit, Los Angeles and Miami. The new mortgages are known as “Community Affordable Loan Solutions” to help more individuals and families obtain affordable loans.
Tamika Gunn is the Vice President of Community Link. The nonprofit helps people on their path to homeownership through wealth-building workshops, credit score improvement skills and financial literacy. He is excited to introduce his customers to this new venture.
A 2021 Charlotte survey found that some major lenders denied home loans to black applicants at three times the rate of white borrowers. Market-wide data showed that there are inequalities in mortgage loans across all income groups.
While 73.8 percent of white Americans own their own home, that number rises to 48.3 percent for Hispanics and 45.3 percent for black households, according to the Census Bureau.
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“A lot of the challenges that minority groups face when buying a home is that they have to have a certain amount of money for the home, and then they also have to have the funds to reduce costs.” North Carolina. said real estate agent Brittany McDonald. “There’s huge disparity in terms of minorities and homeownership. And that goes back decades for a lot of reasons.”
“There’s a lot of gentrification going on everywhere, and there’s a lot going on here in Charlotte as well,” McDonald said. “We are seeing black communities being pushed out of the city where so many black people once lived. So this is an opportunity for people to take advantage of this loan program so they can use the money to buy. in these areas.”
“Homeownership strengthens our communities and can help individuals and families build wealth over time,” said AJ Barclay, head of neighborhood and community lending at Bank of America. “Our community affordable loan solution will help more Black and Hispanic families achieve their dreams of sustainable homeownership, and is part of our broader commitment to the communities we serve.”
Zero down payment loans don’t require mortgage insurance, co-pays are charged to buyers who put down less than 20% of the purchase price, and there is no minimum credit score. Instead, eligibility will be based on factors like prompt lease payments and on-time service, phone and car insurance payments.
Affordable Loan Solution Plan
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