Bank of America has rolled out a new trial program that will offer first-time homebuyers of color zero down payment and zero-cost mortgages that could help to close the glaring homeownership gap among Black and Hispanic communities.
According to the institution, the Community Affordable Loan Solution initiative will be offered in Black and Hispanic neighborhoods in select cities across the United States. Charlotte, Dallas, Detroit, Los Angeles, and Miami will be the first cities to offer the affordable loan program to eligible families and individuals.
“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 press 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.”
Typically a credit score is required to determine a prospective buyer’s eligibility for a home loan, but the new program will forgo that requirement and assess other factors, like if an applicant has a history of making their rent payments, utilities, and auto insurance bills on time. Prospective buyers will be required to take a homebuyer certification course with Bank Of America and with “federally approved housing counseling partners” before they can apply for the program, NBC News noted
Homeownership drops to historic lows for Black Americans in 2020
According to the National Association of Realtors (NAR) during the pandemic, the homeownership rate for Black Americans dropped down to an astounding 43.4% —lower than it was almost a decade ago. In comparison, white homeownership soared by 72.1% across the country, while the rate of new home buyers in Hispanic communities rose to an all-time high of 51.1%. Asian homeownership also climbed to 61.7%.
Mortgage lenders have a sad history of rejecting Black home buyers because of debt-to-income ratio and low credit scores.
Bank of America has a checked past with Black Buyers & Bankers
While Bank of America’s new program could be a glimmer of hope for Black and Hispanic Americans looking to buy their first property, many people are raising an eyebrow at the institution given its checkered past of predatory lending in the community. In 2011, BOA’s subprime lender Countrywide Financial was fined a whopping $335 million over claims that it charged more than 200,000 Black and Hispanic homebuyers higher interest rates and expensive fees. The suit claimed that minority applicants were steered towards signing off on expensive subprime loans even though they could have qualified for traditional mortgage rates.
Bank of America has also been at the root of multiple Banking While Black incidents. In 2021, a San Diego man named John Pittman III made headlines after a branch manager at the Bank of America in Pacific Beach called the cops when he attempted to deposit a $12,000 insurance settlement check. Black Panther Film director Ryan Googler was also accosted by a BOA worker who falsely accused him of being a bank robber when he tried to discretely deposit cash.
Additionally, in 2013, the financial institution was fined $2.2 million in back wages and interest after over a thousand African American job seekers claimed that they were denied employment with the bank’s Charlotte, North Carolina, headquarters from 1993 to 2005.
It may be hard for Black and Brown buyers to build trust with Bank of America after years of sour experiences, but if the program is done right, it could change the face of homeownership for millions of minorities.
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