Home loan

A big bank and a no down payment home loan are in the same sentence. Still, it can be a keeper

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A Twitter user who goes by the name Paul Szypula condemned the program for, as he put it, “discriminating against white people”. “Will (President Joe) Biden’s DOJ sue BofA for this clear case of racial discrimination?” asked Szypula.

I didn’t ask the White House, but I’m going to take a chance and say it’s a definite no.

Brittany Packnett Cunningham, a social justice activist, explained exactly why Szypula’s claim is wrong. In short: because he has no idea what he’s talking about. “For the record, it’s not ‘race based,’ it’s neighborhood based,” Cunningham tweeted.

Cunningham also highlighted concerns about the program raised by black social media users. “Homeownership definitely needs to be made MUCH more accessible, but…I have questions about that interest rate??? she says. “Blacks and Latinas who remember the subprime crisis have MANY reasons not to trust BoA”

The company was found liable in 2013 for selling billions of dollars in “defective mortgages” and was allowed to settle a civil case for $16.65 billion.

RELATED STORY: Bill Black’s dismantling of DoJ’s captured behavior as they tout BofA, JPMC ‘prosecutions’

The company did not immediately respond to Daily Kos’ question about how the interest rates offered to those eligible for the program compare to the average market rate.

Democrat Johnny Akzam too tweeted a warning related to the cost of borrowing. “But beware interested people,” he wrote. “If you pay 5% more for the house over 30 years, then Bank of America will make more money on the backend. All business decisions revolve around their profit margin. Read the fine print.

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AJ Barkley, who leads neighborhood and community lending for Bank of America, said in a press release that the program called Community Affordable Loan Solution is part of the company’s broader commitment to the communities it serves.

“Homeownership strengthens our communities and can help individuals and families build wealth over time,” Barkley said.

The program allows people to use elements of their financial history other than credit scores to prove their creditworthiness like “rent, utility bill, phone and car insurance,” according to Bank of America.

“It requires no mortgage insurance or minimum credit score,” the company said. “Individual eligibility is based on income and place of residence.

“Prospective buyers must complete a homebuyer certification course provided by select Bank of America and HUD approved housing counseling partners before applying.”

Bert Ferguson, a Delaware-based real estate agent, pointed to a negative potential of the program noting that if the real estate market were to take a downward turn, landlords with little or no equity might not be motivated to continue to repay their loans. “People can walk away from a property saying, ‘Look, I don’t have a lot of equity anyway. I’ll just go through a foreclosure,’” Ferguson said.

He asked Bank of America to “check who they’re doing this program with very, very closely” to avoid attracting scammers. But if the program is managed properly and expanded, Ferguson said it could be a “nice situation.”

“My opinion is that I think it’s necessary,” he said.

The homeownership gap between white and black households widened in 2020 during the COVID-19 pandemic, the National Association of Realtors reported. “As 2020 was one of the best years for the housing market, the homeownership rate in the United States soared to 65.5%, up 1.3% from 2019“, reports the association.Although the homeownership rate for Black Americans has also increased to 43.3%, it is still lower than a decade ago.

That’s not true for white, Asian or Hispanic Americans, all groups that saw “decade highs in homeownership in 2020,” the realtors association reported, noting that the homeownership rate for Hispanic Americans hit 50% for the first time.

“Although mortgage rates have fallen below 3% in 2020, not everyone has had the same opportunities to obtain a mortgage and benefit from these low rates,” the group said. real estate agents. “The data shows that black home buyers and owners face additional challenges getting a mortgage.”

Chief among these were the rates of purchase rejection and loan refinancing. “According to our analysis, black applicants are twice as likely to be denied a mortgage as their white counterparts,” the association of real estate agents reported. “While the main reason a mortgage lender rejected was the debt-to-income ratio, black home buyers reported they were also rejected due to low credit.”

Now, white households are 40% more likely to be able to afford a home than black households, according to the Association of Realtors.

I must admit that I have a clear bias in favor of home ownership, especially when there is a thoughtful solution to make it more accessible to black communities.

RELATED STORY: On my way to becoming a first-time home buyer in Georgia: Here’s how I won the deal in a wild market

I’m as suspicious of interest rates as anyone else, but the most important factors in my own home buying journey were the value of my home and whether I could afford the monthly payments along with other living expenses. I got a loan with a low down payment and a reasonable interest rate, but you had to be realistic. I wasn’t going to get any free money and it would have taken me a lot longer to buy a house, which is the only way to avoid all the interest charges.

In the meantime, I would have been subject to rental volatility – certainly the least preferred option, in my case.

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