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To help narrow the home ownership gap between the black and Hispanic communities, Bank of America is launching new zero-down-payment and no-closing-cost mortgage products to help people in minority communities buy their first homes.
The program – called the Affordable Community Loan Solution – will be available to certain markets including predominantly black and/or Hispanic/Latino neighborhoods, in Charlotte, North Carolina; Dallas. Detroit. Los Angeles; and Miami.
Loans are subject to strict underwriting and are based on credit guidelines including timely bill payments including rent, utilities, phone and car insurance payments. Eligibility based on income and home location. No minimum credit score or mortgage insurance required.
Applicants do not have to be black or Hispanic/Latino to qualify for loans.
Before applying, applicants must complete a Home Buyer Certification course offered by Bank of America and Department of Housing and Urban Development accredited housing advisory partners.
“Our affordable community loan solution will help realize the dream of owning sustainable homes for more black and Hispanic families, and is part of our broader commitment to the communities we serve,” said AJ Barkley, president of neighborhood and community lending at Bank of America, He said in a statement.
Wall Street’s efforts come as research has shown how difficult it can be for members of minorities and families to become homeowners.
a A recent report from LendingTree It found that the mortgage rejection rate for black borrowers is twice the rate of the overall population.
“The problem is there,” Jacob, chief economist at LendingTree, told CNBC recently. “We have data to back that up.
“But there are solutions, and black homebuyers must not lose faith that they will never be able to become homeowners,” he said.
In research conducted earlier this year, the Found the National Association of Realtors The home ownership rate for black Americans is about 30 percentage points lower than for white Americans.
With the rate of home ownership in the United States rising to 65.5% in 2020 at the highest annual rise ever, the home ownership rate was 43.4% for Black Americans, 51.1% for Hispanic Americans and 61.7% for Asian Americans, according to the research.
Moreover, black and Hispanic mortgage applicants were 7% more likely to be rejected for loans, each, than white or Asian applicants, at 4% and 3%, respectively, the National Association of Realtors found.
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Bank of America separately pledged $15 billion in community equity to help individuals and families purchase affordable homes by 2025. The program includes affordable home loans, grants, and educational opportunities. To date, the program has helped more than 36,000 individuals and families become homeowners. According to the company, two-thirds of program loans and grants offered through the program have helped multicultural clients become homeowners.
Bank of America also made a separate $15 billion pledge to provide mortgages to low- to moderate-income homebuyers through the American Neighborhood Foundation for assistance through May 2027.
Bank of America also announced the launch of a new prepayment program for small businesses aimed at helping minority and women business owners obtain credit and purchase commercial real estate through grants. This program is launched in Atlanta, Chicago, Charlotte, Dallas, and Los Angeles. There are plans to expand into additional markets in 2023.
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