As part of a new initiative to bridge the racial homeownership gap, Bank of America is now offering mortgages to Black and Hispanic homebuyers in five U.S. cities without a down payment or closing expenses.
The programme is aimed at first-time homeowners of colour in Charlotte, Dallas, Detroit, Los Angeles, and Miami and was just just introduced. According to Bank of America, those applying for a house loan through this scheme won't have their credit score taken into account. Instead, loan processors will consider whether the applicant has made on-time payments for their utility, rent, phone, auto insurance, and other expenses.
According to AJ Barkley, the head of neighbourhood and community lending at Bank of America, the programme, which was unveiled on Tuesday, aims to assist Black and Hispanic families in purchasing a home and beginning to accumulate wealth. We don't want to put individuals in homes they can't stay in with this programme, Barkley told Bloomberg News.
According to Indiana University finance expert Jun Zhu, who spoke to CBS News, Black and Hispanic families often don't have a sizable financial reserve on hand to support a down payment and closing costs, so Bank of America removing those obstacles will undoubtedly aid someone looking for a home.
The gap between accessible resources and the upfront cash required can be filled by minority families if there is a programme with no down payment and no closing expenses, according to Zhu, an expert on mortgage financing and home affordability.
Candidates must be Black or Hispanic, want to purchase a property in one of the five locations, and successfully complete a homebuyer education course accredited by the U.S. Department of Housing and Urban Development in order to be eligible for the bank's Community Affordable Loan Solution programme. Mortgage insurance is not required until a loan has been obtained by the applicant.
Due to financial disparities and the effects of historical discrimination, there are significant discrepancies in homeownership rates between racial and ethnic groups. According to the National Association of Realtors, 7 out of 10 White households own their houses, compared to 4 out of 10 Black households and 5 out of 10 Hispanic households.