Bank of America announced Tuesday a new zero-down payment, zero-closing cost mortgage for first time minority homebuyers.
The trial program is aimed at helping first-time home buyers from Hispanic and black neighborhoods with the offer of mortgages without requiring down payments, closing costs, or minimum credit scores, according to a statement released by Bank of America. Customers who want to use the program will instead be evaluated based on factors such as history of rental payments, utilities, phone and auto-insurance, the statement noted.
The goal of the program is to get 60,000 individuals and families into affordable housing by 2025, the statement continued. The company has so far provided more than $9.5 billion in down-payment loans and $350 million in non-repayable down payment or closing cost grants, according to the statement.
Can someone explain to me how this isn’t racial discrimination? https://t.co/Sf6ChRzRgi
— Tim Young (@TimRunsHisMouth) September 1, 2022
The program, at present, is only expected to launch in Dallas, Detroit, Los Angeles, Miami and Charlotte, North Carolina, according to Bloomberg.
“People can use other mechanisms to define their creditworthiness, buy a home and build their wealth,” BofA’s head of neighborhood and community lending in Charlotte, AJ Barkley told Bloomberg.
Applicants to the program do not have to disclose their race, as U.S. Census data will be used to determine eligible neighborhoods, Barkley told the outlet. (RELATED: Fed Hikes Interest Rates And Issues Warning To Americans)
The announcement has been met with mixed reactions across social media, MarketWatch reported. Some are comparing the process to that of subprime loans, which contributed to the global financial crisis of 2008, forcing many homeowners into homelessness, the outlet noted.
“Is this an adjustable-rate mortgage? Cuz black neighborhoods have already been devastated by predatory loans,” wrote one Twitter user, according to MarketWatch. “I trust BoA as far as I can throw it.” Others have called out the program for its blatant racial overtones.