Bank of America Corp. has implemented a new trial program that aims to help those first-time homebuyers in Black and Hispanic neighborhoods. As part of the program, there will be mortgages that don’t require a down payment as well as closing costs or minimum credit scores. These have long been considered one of the obstacles for those dreaming of home ownership.
Those customers who will try to use the program will be evaluated based on their history of making rent, paying their utility, phone, and insurance payments on time, and not on their credit scores. This program is mainly aimed at helping those in predominantly Black and Hispanic areas of Dallas, Detroit, Los Angeles, Miami, and Charlotte, North Carolina.
The scale of the program and the places it might be available in the future have not yet been disclosed by Bank Of America.
According to AJ Barkley, head of neighborhood and community lending at Bank Of America, this program will allow users to find other ways of showing why they can support a mortgage, allowing more people to buy a home and start building their wealth.
During the pandemic, there was a large annual increase in US homeownership. However, the rates remain low for African Americans, as Black and Hispanic buyers are more likely to have their mortgage requests rejected. Approval rates for homeowners looking to refinance have also been lower for those communities with 66% of Black refinancing applicants being approved, whereas 78% of White ones were approved in 2020.
The US Justice Department has long criticized lenders for discriminating against minority borrowers. Bank Of America also has another $15 billion program that will offer down-payment and closing-cost assistance to lower-income consumers.