Bank of America introduces first-time homebuyer mortgages with no down payment and no closing costs for Black and Hispanic communities nationwide. Mortgage insurance, which is generally charged to buyers who put down less than 20% of the purchase price, is not necessary for these loans, nor is there a required minimum credit score. Instead, eligibility will be determined by criteria including on-time utility, phone, and auto insurance payments, as well as timely rent payments. Before applying for the loan program, prospective purchasers must also complete a homebuyer certification course offered by Bank of America and federally recognized housing counseling partners, the bank said.
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 loan to buy a property.
A bank spokesperson noted that applicants are not required to be Black or Hispanic in order to be eligible for the program.
NAR reported, “Data shows that Black home buyers and owners face extra challenges in getting a mortgage. Denial rates vary significantly by race/ethnic group, with Black Americans having the highest denial rates for purchase and refinance loans. According to our analysis, Black applicants are twice as likely to be denied for a mortgage compared to their White counterparts. While the main reason a mortgage lender rejected their application is the debt-to-income ratio, Black home buyers reported that they also were rejected due to a low credit score. Parsing out by the purpose of loan, denial rates for Black Americans are even higher for home purchase loans. According to the Home Mortgage Disclosure Act (HMDA), nearly 27% of the loan applications for a home purchase were denied compared to 20% which is the denial rate for refinancing.”
Notably, denial rates showed the highest in Georgia and South Carolina.
For renters, the NAR reports stated, “Data also shows that Black renter households are more squeezed than any other race/ethnic group. One in two Black renter households spend more than 30% of their income on rent. And about 28% of Black renter households spend more than 50% of their income on rent, representing nearly 2.3 million households. In contrast, 21% of White renter households are severely cost burdened, spending over 50% of their income on rent. This translates to about 4.9 million White renter households.”
However, with inflation and the current state of the economy, white renters also face rising disparity for spending a larger percentage of their income on rent as well as other living costs, factoring in utilities and gas.
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