In an shocking attack on fairness and equality – not to mention on prospective non-minority mortgage borrowers – Bank of America this week announced the launch of a loan program designed to provide Black and Latino applicants with preferred treatment and generous terms such as zero-down deals, as Just the News reports.
Billed as the Community Affordable Loan Solution, the initiative claims that it will "advance efforts to broaden access to homeownership" by facilitating a no-down-payment, zero-closing-cost loan opportunity for minority first-time purchasers.
According to The Hill, the type of loan options described above will be rolled out in primarily Black and Latino areas in cities including Dallas, Detroit, Los Angeles, Miami, and Charlotte.
The program will reportedly utilize lending guidelines "based on factors such as timely rent, utility bill, phone, and auto insurance payments," and no minimum credit score standards or mortgage insurance requirements will apply.
Borrower eligibility will be determined by individual income as well as the location of the home to be purchased, and applicants will be required to undertake a homebuyer certification course offered by government-approved housing counseling contractors.
According to Fox Business, there are no caps on the number of mortgages that may be written under the program, and properties purchased are required to be situated in census tracts comprised of at least 50% Hispanic or Black residents.
The outlet noted that as of 2020, homeownership continued to be characterized by significant racial disparities, with a 72.1% rate of ownership among white households, a 51.1% rate for Hispanic households, and 43.4% for Black households, a gap this program is presumably targeted at addressing.
Likely criticisms of the program – aside from the blatant racial preferences it embodies – include the fact that without a substantial down payment requirement, borrowers may well find themselves underwater on the properties they buy, and they will also end up paying more money in the long term by not having to pay a notable chunk of the – interest-free – principal balance on day one.
Though A.J. Barkley, head of neighborhood and community lending at Bank of America, declared that what the bank does not wish to do is "place people in homes they cannot stay in," the bitter experience of the housing collapse of more than a decade ago strongly suggests that lending based on skin color, ethnicity, or any other standard besides a borrower's true financial health often sets the stage for disaster, not to mention justifiable animosity from those arbitrarily denied an opportunity to participate.