Bank of America’s recently announced zero-down payment, zero closing-cost mortgage offering for eligible Black/Hispanic buyers in certain neighborhoods has been met with some criticism, according to a report from NPR.
“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,” Samira Payne, director of community revitalization at Rebuilding Together, told NPR.
The loans, which will be available in some majority-minority communities in Charlotte, N.C., Dallas, Detroit, Los Angeles and Miami, use less traditional credit guidelines, including timely rent, utility bill, phone and auto insurance payments, and do not require mortgage insurance or a minimum credit score.
One aspect of the offering, which requires zero-down payment, was seen as being helpful by the experts. “Even a 3 percent 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,” Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition, told NPR.
Other components, like the first-time homebuyer course, are seen as not doing enough to establish good saving and budgeting habits in communities that have historically not had the ability to do either.
“The first-time homebuyer course may help in developing knowledge around saving and maintenance, but we also recognize that there are things that are beyond that initial savings, like unexpected expenses, critical home repairs, disaster recovery,” Payne said.
Other critics are comparing the offering to 2008’s predatory lending practices within minority communities, saying it has the potential to cause harm in the communities Bank of America is trying to help.