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To help reduce home ownership among black and Hispanic communities, Bank of America is launching new zero down payment, zero closing cost mortgage products to help people in minority communities buy their first homes.
The program — called the Community Affordable Loan Solution — will be available to certain markets, including most black and/or Hispanic/Latino neighborhoods in Charlotte, North Carolina; Dallas; Detroit; Los Angeles; and Miami.
The loans are subject to strict guarantees and are based on credit guidelines, including timely bill payments, including rent, utilities, phone and car insurance payments. Eligibility is based on income and place of residence. No minimum credit score or mortgage insurance required.
Applicants do not have to be black or Hispanic/Latino to qualify for the loans.
Before applying, applicants must complete a homebuyer certification course provided by Housing Counseling Partners approved by Bank of America and the Department of Housing and Urban Development.
“Our community affordable loan solution will help make the dream of sustainable home ownership attainable for more Black and Hispanic families, and it̵[ads1]7;s part of our broader commitment to the communities we serve,” AJ Barkley, head of neighborhood and community lending at Bank of America , said in a statement.
“The problem exists”
The Wall Street bank’s efforts come as research has shown how difficult it can be for minority individuals and families to become homeowners.
A recent report from LendingTree found that the mortgage denial rate for black borrowers is twice that of the general population.
“The problem exists,” Jacob Channel, senior economist at LendingTree, recently told CNBC. “We have data to support that.
“But there are solutions, and black homebuyers should not lose faith that they will never be able to become homeowners,” he said.
In research from earlier this year, the National Association of Realtors found that the home ownership rate for black Americans is almost 30 percentage points lower than that of white Americans.
As the U.S. homeownership rate rose to 65.5% in 2020 in the largest annual increase on record, the homeownership rate was 43.4% for black Americans, 51.1% for Hispanic Americans and 61.7% for Asian Americans, according to the research.
Also, black and Hispanic mortgage applicants were more likely to be turned down for loans, each at 7%, compared to white or Asian applicants, at 4% and 3%, respectively, the National Association of Realtors found.
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Bank of America has separately committed $15 billion jointly to help individuals and families purchase affordable housing by 2025. The program includes affordable mortgages, grants and educational opportunities. To date, the program has helped more than 36,000 individuals and families become homeowners. Two-thirds of the program’s loans and grants made through the program have helped multicultural clients become homeowners, according to the firm.
Bank of America has also made a separate commitment of $15 billion to provide low- to moderate-income mortgages through the Neighborhood Assistance Corporation of America through May 2027.
Bank of America also announced the launch of a new small business down payment program aimed at helping minority and women business owners obtain credit and purchase commercial real estate through grants. This program is launching in Atlanta, Chicago, Charlotte, Dallas and Los Angeles. There are plans to expand to more markets in 2023.