Bank of America now offering zero-down mortgages for Black, Latino first-time homebuyers

Bank of America is launching a new program in Charlotte and several other cities that will offer home loans with no down payments and no closing costs to Black and Latino communities.

The program, dubbed the “Community Affordable Loan Solution,” aims to offer more affordable mortgages and address the racial homeownership gap between white and Black or Latino Americans, the bank said this week.

The Charlotte-based bank is also launching the initiative in Dallas, Detroit, Los Angeles and Miami.

The program will evaluate the creditworthiness of first-time homebuyers based on factors like timely rent, utility bill, phone and auto insurance payments.

Individual eligibility for the loans will depend on income and home location. Prospective buyers will need to complete a homebuyer certification course before application.

It was not immediately disclosed when the program will begin accepting applicants.

Addressing racial home ownership gap

The Bank of America announcement cited data from the National Association of Realtors that shows a nearly 30% gap between white and Black homeownerhsip rates. The gap between white and Latino homeowners is nearly 20%.

That nationwide gap is about on par with Charlotte’s, according to a March report from Stacker, an online news outlet focused on data analysis.

“The competitive housing market has made it even more difficult for potential homebuyers, especially people of color, to buy homes,” Bank of America said in its release said.

Homeownership helps families build wealth over time, AJ Barkley, head of neighborhood and community lending at Bank of America said in a news release.

“Our Community Affordable Loan Solution will help make the dream of sustained homeownership attainable for more Black and Hispanic families,” she said.

Bank of America is the largest bank in Charlotte by assets and by deposits, with some 62% of the market. It employs about 16,000 people here.

Enough to close the gap?

Michael Hoard is a local real estate attorney and president of Charlotte Crown Black Real Estate Association. Programs like Bank of America’s new initiative can be helpful, he said, but don’t remedy deep-seated homeownership disparities.

“There’s so many different ways in which Black (borrowers) were discriminated against over time,” Hoard said. “Bank of America’s program is a great effort. I don’t think it’s going to be enough to really close the gap significantly.”

In his experience in Charlotte, programs that go beyond providing capital can be a more effective solution.

“It’s not just about giving somebody something, it’s also about making sure they’re able to maintain and keep it,” Hoard said. “Giving loans without maybe having some type of wraparound counseling or checks over time for folks — it still makes it a challenge, especially for first-time homebuyers.”

Small business grant program

Bank of America is also launching a small business grant program in Charlotte to support women and minority-owned small businesses, according to the bank. It’s designed to extend credit to “historically disadvantaged” small business borrowers and make commercial real estate more affordable.

The program will offer down payment grants of up to $25,000 for eligible businesses applying for commercial real estate loans. Applicants will need to make a 5% minimum down payment.

It’s also launching in Atlanta, Chicago, Dallas and Los Angeles, with plans to expand in 2023.

Other racial equity initiatives

Bank of America has committed significant philanthropic resources to racial equity efforts in recent years.

In Charlotte, that’s included a $10 million investment in Johnson C. Smith University, the city’s only historically black university. It’s part of the $25 million the bank committed to the Mayor’s Racial Equity Initiative, a public-private partnership aimed at addressing longstanding racial disparities in the city.

The bank also gifted $10 million in August to offer in-school healthcare for students in Charlotte-Mecklenburg’s Title 1 schools, in partnership with Atrium Health.

Bank of America also made headlines in June 2020 for a $1 billion pledge to advance racial equity in America, following the murder of George Floyd. Bank of America later increased the amount to $1.25 billion.

This story was originally published September 1, 2022 10:00 AM.