Bank of America to help minorities buy their first home with new mortgages
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To help 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 costs to help members of minority communities buy their first home.
The program – called Community Affordable Loan Solution – will be available for select markets, including majority black and/or Hispanic/Latino neighborhoods in Charlotte, North Carolina; Dallas; Detroit; Los Angeles; and Miami.
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Loans are subject to rigorous underwriting and are based on credit guidelines, including paying bills on time, including rent, utilities, phone, and car insurance payments. Eligibility is based on income and place of residence. No minimum credit score or mortgage insurance is required.
Applicants do not need to be black or Hispanic/Latino to qualify for 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 affordable community loan solution will help make the dream of sustainable homeownership accessible to more Black and Hispanic families, and it’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 press release.
“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 A recent report by LendingTree found that the mortgage rejection rate for black borrowers is double that of the general population.
“The problem is there,” Jacob Channel, senior economist at LendingTree, told CNBC recently. “We have data that confirms this.
“But there are solutions, and black buyers must not lose faith that they can never become owners,” he said.
In research conducted earlier this year, the National Association of Realtors found the homeownership rate for black Americans is nearly 30 percentage points lower than that for white Americans.
While the homeownership rate in the United States climbed 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.
Additionally, black and Hispanic mortgage applicants were more likely to be rejected for loans, each with 7%, compared to white or Asian applicants, at 4% and 3%, respectively, according to the National Association of Realtors. .
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Bank of America has separately made a $15 billion Community Homeownership Pledge to help individuals and families buy affordable homes by 2025. The program includes affordable mortgages, grants, and opportunities of education. To date, the program has helped over 36,000 individuals and families become homeowners. According to the company, two-thirds of the program loans and grants issued under the program have helped multicultural clients become homeowners.
Bank of America also made a separate $15 billion commitment to provide mortgages to low-to-moderate income homebuyers 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 to help women and minority business owners obtain credit and purchase commercial real estate with grants. This program is launched in Atlanta, Chicago, Charlotte, Dallas and Los Angeles. It is planned to expand to other markets in 2023.
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