Bank of America Corp. is drawing a mixed reaction in social media to a zero-down-payment mortgage program aimed at bringing first-time home ownership within closer reach of more African American and Hispanic families.
Reader comments on Bank of America’s new Community Affordable Loan Solution often compared the program to subprime loans, which collapsed as part of the overall real-estate meltdown that in turn precipitated the financial crisis of 2008.
Others applauded the move as a way to address a drop in ownership rates by Black Americans between 2010 and 2020.
The banking giant
BAC,
+0.24%
unveiled the new loan product earlier this week. It’s described as a special-purpose credit program being tested in select markets including Charlotte, Dallas, Detroit, Los Angeles and Miami.
Along with no down payments, the program offers no closing costs for first-time home buyers, with no mortgage insurance or minimum credit score required.
“Is this an adjustable-rate mortgage? Cuz black neighborhoods have already been devastated by predatory loans,” said @mcdpeach on Twitter in reaction to an NBCNews article on the bank’s mortgage program. “I trust BoA as far as I can throw it.”
@Armanwalker said Black home ownership rates remain at our near all-time lows and that the real-estate gap has been increasing. “These are not predatory loans,” @Armanwalker said.
A Twitter user called @Benhem612 raised the question of whether the Bank of America program will be combined with protections to prevent homes from being sold for “pennies on the dollar.”
Twitter user @CamTsn compared the program to Ninja loans, which are loans provided with little or no attempt to investigate the ability to repay. “What a great idea, offer Ninja loans 2.0 at the top of a housing bubble,” @CamTsn said. “I am absolutely sure this will not negatively impact minorities and their communities.”
In describing its new mortgage program, Bank of America said it weighs mortgage eligibility based on timely rent, utility bill, phone and automobile-insurance payment, with home buyers required to take a certification class from approved housing counseling partners, prior to application.
The mortgage effort by the bank comes as the U.S. Federal Reserve and other banking regulators work to update the Community Reinvestment Act (CRA) in an effort to increase the rate of home ownership in low income areas. One of the objectives of the updated CRA is to promote special-purpose credit programs aimed at boosting lending.
While the overall U.S. home-ownership rate jumped 1.3% to 65.5% in 2020, the rate for Black Americans fell to 43.4% in 2020 from 44.2% in 2010, according to the National Association of Realtors. The home-ownership rate among African Americans remains nearly 30 percentage points behind the 72.1% ownership rate among white Americans.
Bank of America said the Community Affordable Loan Solution adds to its community homeownership commitment to provide $15 billion in mortgages by 2025, with a target of helping 60,000 individuals and families to purchase homes.
The Charlotte, N.C.–based bank has also committed an additional $15 billion through May 2027 to the Neighborhood Assistance Corporation of America (NACA) to provide mortgages to low- and moderate-income home buyers.
Also read: Mortgage rates rise to 5.66%, highest level since June, likely to slow price appreciation.
Bank of America’s stock, which was down 1.7% in morning trading Thursday, has shed 10.5% over the past three months, while the SPDR Financial Select Sector exchange-traded fund
XLF,
+0.30%
has lost 6.6% and the S&P 500 index
SPX,
+0.30%
has declined 4.7%.
Bank of America draws mixed reviews for zero-down-payment mortgages aimed at boosting Black and Hispanic home ownership
Bank of America Corp. is drawing a mixed reaction in social media to a zero-down-payment mortgage program aimed at bringing first-time home ownership within closer reach of more African American and Hispanic families.
Reader comments on Bank of America’s new Community Affordable Loan Solution often compared the program to subprime loans, which collapsed as part of the overall real-estate meltdown that in turn precipitated the financial crisis of 2008.
Others applauded the move as a way to address a drop in ownership rates by Black Americans between 2010 and 2020.
The banking giant
+0.24%
BAC,
unveiled the new loan product earlier this week. It’s described as a special-purpose credit program being tested in select markets including Charlotte, Dallas, Detroit, Los Angeles and Miami.
Along with no down payments, the program offers no closing costs for first-time home buyers, with no mortgage insurance or minimum credit score required.
“Is this an adjustable-rate mortgage? Cuz black neighborhoods have already been devastated by predatory loans,” said @mcdpeach on Twitter in reaction to an NBCNews article on the bank’s mortgage program. “I trust BoA as far as I can throw it.”
@Armanwalker said Black home ownership rates remain at our near all-time lows and that the real-estate gap has been increasing. “These are not predatory loans,” @Armanwalker said.
A Twitter user called @Benhem612 raised the question of whether the Bank of America program will be combined with protections to prevent homes from being sold for “pennies on the dollar.”
Twitter user @CamTsn compared the program to Ninja loans, which are loans provided with little or no attempt to investigate the ability to repay. “What a great idea, offer Ninja loans 2.0 at the top of a housing bubble,” @CamTsn said. “I am absolutely sure this will not negatively impact minorities and their communities.”
In describing its new mortgage program, Bank of America said it weighs mortgage eligibility based on timely rent, utility bill, phone and automobile-insurance payment, with home buyers required to take a certification class from approved housing counseling partners, prior to application.
The mortgage effort by the bank comes as the U.S. Federal Reserve and other banking regulators work to update the Community Reinvestment Act (CRA) in an effort to increase the rate of home ownership in low income areas. One of the objectives of the updated CRA is to promote special-purpose credit programs aimed at boosting lending.
While the overall U.S. home-ownership rate jumped 1.3% to 65.5% in 2020, the rate for Black Americans fell to 43.4% in 2020 from 44.2% in 2010, according to the National Association of Realtors. The home-ownership rate among African Americans remains nearly 30 percentage points behind the 72.1% ownership rate among white Americans.
Bank of America said the Community Affordable Loan Solution adds to its community homeownership commitment to provide $15 billion in mortgages by 2025, with a target of helping 60,000 individuals and families to purchase homes.
The Charlotte, N.C.–based bank has also committed an additional $15 billion through May 2027 to the Neighborhood Assistance Corporation of America (NACA) to provide mortgages to low- and moderate-income home buyers.
Also read: Mortgage rates rise to 5.66%, highest level since June, likely to slow price appreciation.
Bank of America’s stock, which was down 1.7% in morning trading Thursday, has shed 10.5% over the past three months, while the SPDR Financial Select Sector exchange-traded fund
+0.30%
+0.30%
XLF,
has lost 6.6% and the S&P 500 index
SPX,
has declined 4.7%.
Source: https://www.marketwatch.com/story/bank-of-america-draws-mixed-reviews-for-zero-down-payment-mortgagesaimed-at-boosting-black-and-hispanic-home-ownership-11662044617?siteid=yhoof2&yptr=yahoo