To bridge the homeownership gap between the African American and Hispanic Hispanic communities, Bank of America is launching new mortgage products with no down payment and closing costs to help people from minority communities buy their first home. The program, called the Community Affordable Loan Solution, will be available to select markets including Black and/or Hispanic/Latino majority neighborhoods in Charlotte, North Carolina, Dallas, Detroit, The angel, and Miami.
Loans are backed by strict insurance and are based on credit guidelines, including timely bill payments, including payments for rent, utilities, telephone and auto insurance. Eligibility is based on income and place of residence is required.
Applicants do not have to be Black or Hispanic/Latino to qualify for the 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 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,” AJ Barkley, head of neighborhood and community lending at Bank of America, said in a statement.
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 recent report from LendingTree found the mortgage denial rate for Black borrowers is twice that of the overall population. “The problem does exist,” Jacob Channel, senior economist at LendingTree, recently 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,” he said. In research from earlier this year, the National Association of Realtors found the homeownership rate for Black Americans is almost 30 percentage points lower than white Americans. As the U.S. homeownership rate climbed to 65.5% in 2020 in the highest annual rise 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.
Also, according to the National Association of Realtors study, Black and Hispanic mortgage applicants were more likely to decline a loan, 7% each, compared to White or Asian applicants, 4% and 3%, respectively. Bank of America has separately committed to a $15 billion home ownership community to help individuals and families buy affordable homes through 2025. The program includes affordable mortgages, grants, and educational opportunities. According to the company, one-third of the program’s loans and grants have helped multicultural clients become homeowners.
Bank of America has also separately committed $15 billion to provide mortgages to low- and middle-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 aimed at helping minority and women business owners obtain credit and purchase commercial real estate through grants. That program is launching in Atlanta, Chicago, Charlotte, Dallas, and Los Angeles. There are plans to expand to additional markets in 2023.