Bank of America piloting no-money-down mortgages in 5 cities to help Black, Latino buyers
Program participants must live in census tracts with more than 50 percent African American and/or Hispanic-Latino residents.
Bank of America plans to help in bridging the racial divide and increasing homeownership rates for Black and Hispanic-Latino families.
According to a report in USA Today, the banking giant announced Tuesday that first-time home buyers in select neighborhoods in Charlotte, Detroit, Miami, Dallas and Los Angeles would have access to a new mortgage option through its Community Affordable Loan Solution, which has no down payment, no closing costs and no minimum credit score requirements.
“Homeownership strengthens our communities and can help individuals and families to build wealth over time,” AJ Barkley, head of neighborhood and community lending for Bank of America, said in a statement. “Our Community Affordable Loan Solution will help make the dream of sustained homeownership attainable for more Black and Hispanic families, and it is part of our broader commitment to the communities that we serve.”
Neither a minimum credit score nor mortgage insurance — which purchasers may have to pay if they put down less than 20 percent of the cost of a property — are mandated under the program.
Instead, eligibility is based on income, home location and certain financial criteria such as rent, utilities and auto payments. There is also a mandated homebuyer course from Bank of America and some Department of Housing and Urban Development-certified partners.
The program is not only open to people of color, though participants must live in census tracts with more than 50 percent of African Americans and/or Hispanic-Latinos. There is no maximum or minimum loan size, and there’s no restriction on the number of loans that can be included in the program.
According to USA Today, a report by the Urban Institute found that the disparity in homeownership rates between Black and white households in the United States has been wider in recent years than it was when it was legal to discriminate against purchasers based on race.
In 1960, the rate of white homeownership was 65 percent compared to 38 percent for Blacks. The Fair Housing Act, which forbade racial discrimination by landlords and financial institutions, was passed in 1968.
These gains were reversed after 2000, as forces within and outside the housing market converged to lower the black homeownership rate. By 2018, 42 percent of Black households, 57 percent of Asian households, and 47.5 percent of Hispanic American households were homeowners, while 72 percent of white households were, according to USA Today.
The National Association of Realtors reported that between Black and white Americans, there is currently a nearly 30-percent homeownership divide, while the gap for Hispanic buyers is almost 20 percent.
“As the gap in homeownership rates for Black and White Americans has widened, it is important to understand the unique challenges that minority home buyers face,” Jessica Lautz, vice president of demographics and behavioral insights for NAR, said back in February. “Housing affordability and low inventory has made it even more challenging for all buyers to enter into homeownership, but even more so for Black Americans.”
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