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To narrow the homeownership gap between black and Hispanic-Latino communities, Bank of America is launching new mortgage products with no down payment and no closing fees to help people in minority communities buy their first home.
The program — called the Community Affordable Loan Solution — will be available in select 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 underwriting and are based on credit guidelines, including on-time bill payments, including rent, utilities, phone and auto insurance payments. Eligibility is based on income and residence. No minimum credit score or mortgage insurance is required.
Applicants do not need to be black or Hispanic/Latino to qualify for the loans.
Before applying, applicants must complete a homebuyer certification course offered by housing advisory partners approved by Bank of America and the Department of Housing and Urban Development.
“Our affordable community lending solution will help make the dream of sustainable homeownership achievable for more black and Hispanic families, and it’s part of our wider commitment to the communities we serve,” AJ Barkley, head district and community loans at Bank of America, the statement said.
‘The problem exists’
The Wall Street bank’s efforts come as research has shown how difficult it can be for minorities and families to become homeowners.
A recent report from LendingTree found that the mortgage denial rate for black borrowers is twice that of the total population.
“The problem exists,” Jacob Channel, senior economist at LendingTree, recently told CNBC. “We have data to back that up.
“But there are solutions, and black homebuyers should not lose faith that they will never be able to become homeowners,” he said.
In research earlier this year, the National Association of Realtors found that home ownership for black Americans is nearly 30 percentage points lower than for white Americans.
While US home ownership rose to 65.5% in 2020, the highest annual increase on record, home ownership was 43.4% for Black Americans, 51.1% for Hispanic Americans, and 61.7% for Asian Americans. according to the research.
In addition, black and Hispanic mortgage applicants were more likely to be turned down for loans, at 7% each, compared with 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 in community home ownership to help individuals and families purchase affordable homes 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 provided through the program have helped multicultural clients become homeowners, according to the company.
Bank of America has also made a separate $15 billion pledge to provide mortgages to low- to middle-income home buyers through May 2027 through the Neighborhood Assistance Corporation of America.
Bank of America also announced the launch of a new small business deposit program designed to help minority and female entrepreneur owners obtain credit and purchase commercial real estate through grants. That program will be launched in Atlanta, Chicago, Charlotte, Dallas and Los Angeles. There are plans to expand to other markets in 2023.