Bloomberg: Bank of America Corp. started a trial program aimed at helping first-time homebuyers in Black and Hispanic neighborhoods by offering mortgages that don’t require down payments, closing costs or minimum credit scores, all considered longtime obstacles to narrowing the gap between White and minority ownership.
Customers using the program will be evaluated for a home loan not by credit scores, but rather factors such as their history of making rent, utility, phone and auto-insurance payments on time, BofA said in a statement Tuesday. The program will be tried out in certain predominately Black and Hispanic areas of Dallas, Detroit, Los Angeles, Miami and Charlotte, North Carolina. BofA wouldn’t disclose the planned size of the program, which may be expanded later to other cities.
The Charlotte-based bank is going beyond credit scores so “people can use other mechanisms to define their creditworthiness, buy a home and build their wealth,” AJ Barkley, head of neighborhood and community lending at BofA, said in an interview.
While US homeownership saw its biggest annual increase ever during the pandemic, it remained lower than a decade earlier for African Americans, and Black and Hispanic buyers were more likely to be rejected for mortgages than their White and Asian counterparts, accordingto the National Association of Realtors. Approval rates for homeowners looking to lower their payments have also varied by race, with BofA approving 66% of Black refinancing applicants and 78% of White ones in 2020, according to data compiled by Bloomberg.
