To increase homeownership among Black and Hispanic/Latino communities, Bank of America announced that it is now providing zero down payment and zero closing cost mortgages to first-time homebuyers in a limited number of cities.
Certain Charlotte, Dallas, Detroit, Los Angeles, and Miami communities will be the first to provide the option. According to the bank, the new mortgage, known as the Community Affordable Loan Solution, intends to assist qualified individuals and families in obtaining an affordable home loan.
“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 release. “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.”
Rather than requiring mortgage insurance or a minimum credit score, the lending program will evaluate the amount of rent paid on time and the timely payment of utility bills, phone bills, and auto insurance.
Before applying for the loan, applicants must also complete a homebuyer certification program offered by Bank of America and federally approved housing counseling partners.
According to the most recent National Association of Realtors data, the racial gap in homeownership rates in the U.S. remained substantial in 2020.
White homeownership rates were 72.1% in 2020, while Hispanic homeownership rates were 51.1% and Black homeownership rates were 43.4%. The Black homeownership rate has declined since 2010, according to the NAR.
The NAR stated, “During the pandemic, rising home prices and low housing supply have disproportionally impacted Black households more than any other race/ethnic group.” According to the association, White households are now 40% more likely than Black households to be able to afford a home.
In the past, Bank of America and other major financial institutions like Wells Fargo have had a difficult time lending to people of color and people with disabilities.
In 2011, Bank of America’s Countrywide Financial, a subprime lender purchased in 2008, was fined $335 million after it was accused of charging Black and Hispanic homebuyers higher interest rates.
In 2012, Wells Fargo agreed to pay $175 million to settle claims that targeted minority communities with riskier, more expensive home loans. JPMorgan Chase was accused of predatory lending in Miami in 2014.
