Zero down payment

Investment Analysis Clubs Macro Economic Trends and Risks
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Bank of America announces zero down payment, zero closing cost mortgages for Black and Hispanic first-time homebuyers
www.nbcnews.com/business/consumer/bank-america-zero-down-pay…
Bank of America said it is now offering first-time homebuyers in a select group of cities zero down payment, zero closing cost mortgages to help grow homeownership among Black and Hispanic/Latino communities…

The loans require no mortgage insurance — the additional fee typically charged to buyers who put down less than 20% of the purchase price — and no minimum credit score. Instead, eligibility will be based on factors like timely rent payments and on-time utility bill, phone and auto insurance payments.

DB2

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Just out of curiosity, they talk about eligibility, but I wonder if the interest rate charged will be higher in order to compensate for the increased risk to the lender of providing the loan without the usual protections required under other circumstance.

Jeff

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Just out of curiosity, they talk about eligibility, but I wonder if the interest rate charged will be higher in order to compensate for the increased risk to the lender of providing the loan without the usual protections required under other circumstance.

It didn’t mention interest rates. I suspect it wouldn’t be higher because of publicity aspects.

With no requirement for mortgage insurance it means that BAC is ‘self insured’ for this program. With no down payment, when a recession occurs that drops home prices these properties will be underwater.

DB2

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<With no requirement for mortgage insurance it means that BAC is ‘self insured’ for this program. With no down payment, when a recession occurs that drops home prices these properties will be underwater.>

I’ll bet you a quarter that BAC will bundle these loans into derivatives which they will sell on the secondary market. They will probably divide them into tranches of which some will be AAA.

That’s how the banks offloaded risk of NINJA loans before the 2008 financial crisis.

Wendy (Fool me once, shame on you. Fool me twice, shame on me.)

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With no requirement for mortgage insurance it means that BAC is ‘self insured’ for this program. With no down payment, when a recession occurs that drops home prices these properties will be underwater.>
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I’ll bet you a quarter that BAC will bundle these loans into derivatives which they will sell on the secondary market.

There’s a chance that they won’t because of ESG and PR concerns, so I’ll take you up on the bet. Let’s make it for one Forever Stamp so as to adjust for inflation.

DB2

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There’s a chance that they won’t because of ESG and PR concerns,

And the flipside: when does the howling start about “discriminating against white people”? “Affirmative action” has been a boogyman for years.

Fifteen States Respond to ‘Woke Capitalism,’ Threaten to Cut Off Banks That Refuse to Service Coal, Oil Industries

The group of state treasurers, auditors and comptrollers from West Virginia, Arizona, Arkansas, Idaho, Louisiana, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Utah, Wyoming, Alabama, Texas and Kentucky say they have a “compelling government interest” to eleven major financial institutions that “are not engaged in tactics to harm the very people whose money they are handling.”

JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, and Goldman Sachs were among the recipients.

https://www.mooreforwv.com/fifteen_states_respond_to_woke_ca…

Bank of America Shareholders Band Together Against Company’s ‘Woke’ Practices

Members of a group called The Boardroom Initiative issued a shareholder proposal that rebuked some of Bank of America’s “wokeness,” and though the proposal was shot down, members of the group remained upbeat.

https://tennesseestar.com/2022/04/28/bank-of-america-shareho…

Some have been pointing at this new category of risk for corporations for a while now. Not a risk from corrupt business practices or repressive, corrupt, foreign governments, but for crossing the Shinyland thought police.

Steve

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And the flipside: when does the howling start about “discriminating against white people”? “Affirmative action” has been a boogyman for years.

If one actually reads the article, race doesn’t seem to be directly relevant:

“...**Applicants do not have to be Black or Hispanic** to qualify for the product, a bank representative said...”

Eligibility is based on income and geography with applicants having to take a course on how to keep a home.

...Individual eligibility is based on income and home location. Prospective buyers must complete a homebuyer certification course provided by select Bank of America and HUD-approved housing counseling partners prior to application... https://www.prnewswire.com/news-releases/bank-of-america-int…

I dunno. It seems like a pretty good way to increase home ownership in low income communities (which are disproportionately mostly Black or Hispanic) with low rates of home ownership.

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I dunno. It seems like a pretty good way to increase home ownership in low income communities (which are disproportionately mostly Black or Hispanic) with low rates of home ownership.

And that disproportionalety will make the case. If white people are not benefiting proportional to their proportion of the general population, the “anti-woke” crowd, which already has BoA in it’s crosshairs, will have more to beat the company up about.

Steve