Bank of America recently announced a new mortgage product with zero down payment and zero closing costs aimed at helping close the homeownership gap in Black and Hispanic communities.
The pilot program is called the Community Affordable Loan Solution and “uses credit guidelines based on factors such as timely rent, utility bill, phone and auto insurance payments,” according to a press release.
In addition to not needing to put any money down, the pilot program waives traditional requirements like a minimum credit score and mortgage insurance for first-time homebuyers.
Eliminating these criteria is a big help for many Black families and their Hispanic counterparts as they have traditionally been barriers to getting approved for mortgage loans.
“Even a 3% down payment on a home is a level of wealth or just spare cash that many families don’t have. And that will be disproportionately true for Black and Latino borrowers,” National Community Reinvestment Coalition CEO Jesse Van Tol told NPR.
AJ Barkley, Bank of America’s head of neighborhood and community lending, said that is why they introduced the new Community Affordable Loan Solution program.
“Homeownership strengthens our communities and can help individuals and families to build wealth over time,” Barkley said in a statement. “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.”
According to CNBC, the program will launch first in several markets, including Charlotte, Dallas, Detroit, Los Angeles and Miami, particularly in predominately Black and Hispanic neighborhoods. If the initiative is successful, Bank of America may introduce the mortgage product in additional markets.
Eligibility is determined by income and home location. Potential buyers must also complete a homebuyer certification course provided by counseling partners to Bank of America that the U.S. Department of Housing and Urban Development (HUD) approves.
Some experts lauded the program, particularly since a recent LendingTree report shows that Black homebuyers’ rejection rate is twice that of the overall population.
“The problem does exist,” LendingTree senior economist Jacob Channel told CNBC. “We have data that backs that up. … But there are solutions, and Black homebuyers shouldn’t lose faith that they’ll never be able to become homeowners.”
Others said the program is a start but expressed concern over how sustainable Black homeownership will be for buyers over the long term without additional support.
Samira Payne is the director of community revitalization at Rebuilding Together, a nonprofit that focuses on repairing and revitalizing homes to ensure they are safe and healthy.
“It’s not that we just get folks into the home, but that we’re also able to help them have the savings, the resources necessary to make sure their homes are safe and healthy in the long run,” Payne told NPR.
Bank of America has other resources they hope will help homebuyers better navigate the road to homeownership successfully.
They include the First-Time Homebuyer Online Edu-Series, BetterMoneyHabits.com, the Bank of America Down Payment Center and the Bank of America Real Estate Center.
Interested parties can contact Bank of America at 1-800-641-8362.
PHOTO: In this July 21, 2020, file photo, a homeowner tours his new home, in Washingtonville, N.Y. Two studies released Wednesday, June 16, 2021, found that the nation’s housing availability and affordability crisis is expected to worsen significantly following the pandemic, likely widening the housing gap between Black, Latino and white households, as well as putting homeownership out of the reach of lower class Americans. (AP Photo/John Minchillo, File)