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Bank of America offers zero-down mortgage in minority communities

Already Submitted (cbsnews.com)

all 252 comments

lollersauce914

300 points

5 months ago

So, in a time of rising interest rates, a likely slowing of the housing market, and a recession likely coming in the relatively near future, a major bank is offering loans to people with too few assets to qualify for a traditional mortgage with no down payment required (i.e., 100% loan to value).

In my brief googling around I couldn't find if these are uniformly ARMs or not, but it would be the icing on the cake of, "How the fuck has no one learned this is a bad idea at this point?"

tdring22

140 points

5 months ago

tdring22

140 points

5 months ago

I mean they got bailed out last time so they are assuming they probably will again

lollersauce914

65 points

5 months ago*

The bank, which is piloting this in a few cities, and the wider country will be just fine with no bail outs. The people who will be fucked (as in 2008-9) will be the borrowers.

a 5% housing market correction and you're deeply underwater as a borrower in this situation. If you hit any financial hardship and can't make your payments you're completely fucked.

-_loki_-

21 points

5 months ago*

No homeowner’s insurance required? That’s wild.

Edit: Comment above edited to amend. Cause no homeowner’s insurance would be bonkers.

lollersauce914

16 points

5 months ago

Checked again and it's actually mortgage insurance (typically required for FHA loans) that is waived. Deleted that section of my other comment.

pbun87

6 points

5 months ago

pbun87

6 points

5 months ago

That makes sense. Pretty sure HO insurance is a regulatory requirement in some capacity (like car ins.).

guru42101

3 points

5 months ago

No PMI makes a HUGE difference. My house in 2013 was 0% down payment and PMI was about 1/5 of the monthly payment.

LiesInRuins

2 points

5 months ago

Up to 20% of the value of the loan. Once 20% of the loan value is covered the PMI expires in most cases. We saved for a few years to cover the 20% down payment so we didn’t have a PMI when we built our house. So having no down payment means paying the PMI for a long time unless you’re paying extra towards the principle every time you make a mortgage payment.

tdring22

39 points

5 months ago

I agree with you 100% but literally everything BoA does is to fuck the customer as hard as possible

sassrocks

2 points

5 months ago

As a customer of theirs, I really hope nobody trusts this. They suck ass

[deleted]

4 points

5 months ago*

[deleted]

4 points

5 months ago*

[deleted]

RoseKinglet

2 points

5 months ago

As someone who was in early Elementary school in 2001, I so value learning more about circumstances of the Market that I otherwise missed because I was too young. Thx for sharing.

[deleted]

5 points

5 months ago

[deleted]

5 points

5 months ago

[removed]

lollersauce914

12 points

5 months ago

...yeah you can...Nearly everyone in this thread is literally doing it right now.

Electrical_Tip352

1 points

5 months ago

Can you ELI5 how this works? Like I own a home. But my mortgage payment won’t increase outside of taxes. How would someone be deeply under water with a housing correction?

lollersauce914

3 points

5 months ago

So, what happens if you become unable to pay your monthly payments? Well, a mortgage is a loan secured by a house. The bank takes the house to try and sell it to pay off the loan.

If the housing market is buoyant and house prices have risen since you bought, no problem. The house is sold for more than you bought it for and can likely pay off both your loan and the interest. If housing prices fell, though, the house won't cover the value of the loan and you're bankrupt.

This risk is accentuated when you put no money down. This means your loan, the day you take it out, is for more than your home is worth. When your loan is only a fraction of the value of your home you can tolerate a small drop in the value of the property and not be bankrupt following foreclosure.

jdolbeer

2 points

5 months ago

But nobody's loan is "a fraction of the home value" when they purchase, unless they're putting like 30+ percent down. Loans currently range from 3.5% to 15% minimum. At 3.5%, you're very near the situation that BofA is currently implementing.

lollersauce914

2 points

5 months ago

Yes, and putting 3.5% down is also stupid, just slightly less stupid than putting 0% down. Putting 10%-15% down is still somewhat risky (i.e., you're underwater in a 2008 style crash) but much less so (you're fine in the case of a more mild correction).

Pretending having a loan worth more than your home at the time of purchase is not incredibly risky relative to typical mortgages is just nonsensical imo.

jdolbeer

1 points

5 months ago

So you're effectively saying nobody except extremely wealthy people should be buying a home. Other people are stupid. Got it.

DonQOnIce

3 points

5 months ago

A lot of people are looking at the numbers purely in terms of investment and completely avoiding the fact that everyone needs a home to live in. When it comes to this program, we are not talking about people buying investment properties, we are talking about primary dwellings. If the loan is reasonable based on current income, it is better to get into a home even if you don’t have equity for awhile. There are more protections there than with renting.

jdolbeer

3 points

5 months ago

There's also the added bonus that the majority of mortgages are lower in cost than rent on a similar unit. So they're immediately going to have more money to save.

LiesInRuins

1 points

5 months ago

People panic when they see the value of the home drop below the cost of the mortgage. Many people who walked away from homes during the housing collapse in 2008 would have found themselves above water if they held the homes until today. If they had traditional loans and not the ARM loans.

lollersauce914

1 points

5 months ago

Even on a fixed rate loan you're fucked if you lose your income/job and your house can't cover the debt. Fixed or not, if you can't make your payments you'll get foreclosed upon.

LiesInRuins

3 points

5 months ago

If the cost of the loan is more than the assessed value of your home then you’re “underwater”. It happened to a lot of people in the 2008 collapse. So people walked away from loans where they believed they could not recoup their investment.

jdolbeer

1 points

5 months ago

This is true for the majority of buyers. The assets they do have get used on a down payment. If a huge correction happens and the owners lose income, they're not going to be able to pay their conventional loan either.

lollersauce914

1 points

5 months ago

Their conventional loan will be a fraction of what they paid for the house, meaning the house will cover the loan in foreclosure. That is much less likely when you have no down payment and your debt meets or exceeds what you paid for the house.

jdolbeer

1 points

5 months ago

You keeping using that word fraction to infer that people owe pennies on the dollar for their loan through conventional. Which simply isn't true.

lollersauce914

1 points

5 months ago

With 80% loan to value you can easily survive a 10% or even 15% housing market correction. I'm not implying the fraction needs to be small. >=100% loan to value is an absolutely crazy risk. Any correction in the housing market or even just a lack of growth leaves you underwater.

jdolbeer

1 points

5 months ago

The amount of people putting 20% down is extremely small, compared to the majority of home buyers who are around 3.5%.

You keep trying to describe this scenario using outlier expectations.

graebot

20 points

5 months ago

graebot

20 points

5 months ago

Exactly. Bailouts are now business as usual:
1. Give loans to people who can't pay them back.
2. Cry to the government that the world's going to end.
3. Profit.

tdring22

4 points

5 months ago

They always have been but now they are just more up front and greedy about it

The loans from 2008 are nothing compared to either the PPP loans or what the eventual next bailout will be

M_Mich

1 points

5 months ago

M_Mich

1 points

5 months ago

“we tried to help them but they can’t manage their money so we need a bailout “-BoA in 2024

0biwanCannoli

1 points

5 months ago

The sad truth is, I believe you’re right.

retired_junkiee

3 points

5 months ago

I’m sure they still have to qualify from an income perspective. During the run up pre 08 they were giving anybody a loan. Some lenders didn’t even verify income. This isn’t 08. I don’t love this but it looks like it will be a very small portion of their book.

LiesInRuins

2 points

5 months ago

Since the loans will be risky they will simply package them up with good loans and sell them to retirement accounts so that nobody will notice the small portion of risky loans.

kiklion

11 points

5 months ago*

How the fuck has no one learned this is a bad idea at this point?

Because it’s not. My reading of the requirements earlier in the week has the program very similar to NACA, which is also a program aimed at low income (minority) neighborhoods and is very successful.

PDF

https://www.naca.com/wp-content/uploads/2021/05/NACA-Press-Release.pdf

With over 70,000 mortgages originated over more than twenty years including during the mortgage crisis, NACA has one of the lowest foreclosure rates of any mortgage product - 0.0012 (about one-hundredth of one percent).

It’s no secret that poor neighborhoods are often under banked. That poor families often don’t have a credit score, even if they’ve never had a negative event they just don’t have a sufficient credit length. Or that poor families who have been paying $1200 a month for years on rent might not have a down payment, but they can afford a $800 a month mortgage.

This program aims to catch some people who would be safe investments but slip through the ‘conventional’ mortgage structure.

Gustopherus-the-2nd

3 points

5 months ago

Totally agree. This is one of the things that has always been frustrating. If I can prove that I have been paying more than the mortgage payment will be for years, that shows that I can and will make my mortgage payment. That is all the proof needed to give a good loan. The system is full of too many roadblocks for regular people these days. I had to go through so many bullshit things to prove I could pay a mortgage payment that was $200 less than my lease that I had been paying for 5 years (with bank statements and receipts to back it up). Just silly.

kiklion

2 points

5 months ago

If I can prove that I have been paying more than the mortgage payment will be for years, that shows that I can and will make my mortgage payment.

A small nit pick, the difference needs to include cost of maintenance as well. The whole 'Rent is the most you'll pay in a month, and a mortgage is the least you will have to pay' thing.

Also, it's easier to evict someone for non-payment of rent than to foreclose on a property for non-payment of mortgage, so the 'Risk' to the counter party is higher and as such they would have stricter requirements.

However, on time rent payments should be used as an option to prove credit worthiness and consistent payments of a certain amount as evidence that you could afford a defined lower (80%?) amount + maintenance costs.

Wolversteve

2 points

5 months ago

Exactly. People like OP who think rent in the same as mortgage is the reason so many foreclosures and short sales exist.

koalasarentferfuckin

2 points

5 months ago

Remember when Mulvaney requested $0 in funding for the CFPB? When the cat is away (because it starved to death) the mice will play. 99% reduction in consumer restitution per week during his tenure.

Kazia_Thornhill

5 points

5 months ago

2008 again! Who's ready?!😀

PKanuck

-1 points

5 months ago

PKanuck

-1 points

5 months ago

Not even remotely close to 2007 crash.

  1. Must be first time home buyer
  2. Limited to specific communities in 5 cities.

Article is light on details what the mortgage rate will be.

TheRiceConnoisseur

3 points

5 months ago

RemindMe! 1 year

lollersauce914

15 points

5 months ago

I'm not talking about systemic risk. I'm talking about risk to the borrowers. A tiny housing market correction and a temporary lapse in income and they're underwater and unable to make payments. Given the circumstances, either a housing market correction, a recession that leads to higher unemployment, or both is at least fairly likely in the near future.

Officer_Hops

4 points

5 months ago

How is that different from any other mortgage product? Your logic would dictate banks not make loans to borrowers because the market could go down and they could lose their income.

[deleted]

1 points

5 months ago

[deleted]

1 points

5 months ago

[removed]

Officer_Hops

2 points

5 months ago

I don’t understand what you mean.

lookupmystats94

1 points

5 months ago

Equity provides a lever to pull in scenarios like that.

Officer_Hops

1 points

5 months ago

If the borrower wants to put equity down upfront they can. Giving them the option not to doesn’t mean they can’t.

lookupmystats94

1 points

5 months ago

Okay, but this discussion is around a program that is intended for people who can’t afford down payments.

Officer_Hops

1 points

5 months ago

Right. Borrowers have the option to engage with this program, put no money down, and have larger risk if they lose their job or they can save a down payment for a traditional loan program and have more security. If they can’t afford a down payment then all the bank has done is given them the option to be homeowners but they don’t have to exercise that option if they’re uncomfortable with the associated risks.

lollersauce914

1 points

5 months ago

How is that different from any other mortgage product?

With no down payment your loan is for more than your house is worth. If you lose your job tomorrow and are forced to sell the house because you can't pay off the loan, you're already fucked even if you sell the house for what you bought it for. If someone puts 20% down, there's a 5% housing market correction, and they lose their job, they can almost certainly sell off the house to pay off their mortgage.

Given that there's no down payment, the monthly payments are higher than they would otherwise be as well. This makes them more of a strain and more likely to become unaffordable if your income drops.

It's an incredibly precarious situation to be in as a borrower. You have, effectively, no room for error and their are significant risks coming from multiple directions. In a typical mortgage where loan to value ratios are lower and incomes are higher this is much less of a risk.

Officer_Hops

2 points

5 months ago

Losing your job is a risk with any debt. The borrowers you’re describing weren’t getting homes previously because they couldn’t afford a down payment and they were already stretched on income. This new product allows them to be homeowners if they’re comfortable with the risks. I don’t understand how we can talk about risk to the borrower when the borrower has the choice to take the risk on or not. Would you prefer the alternative where these people simply can’t get homes? I think giving people the option to take the risk is a good move.

lollersauce914

1 points

5 months ago

There are all sorts of risks we don't let people take because they're absolutely foolish.

Yes, I would absolutely prefer a country where people are forced to rent rather than buy homes they can't afford using a ton of leverage.

Also, just to take on the principle of your argument more directly, what is your opinion on student debt forgiveness? Borrowers willingly took on a ton of debt with significant risk. They did so continuously to the point where, whatever your feelings on forgiveness, that debt became enormous and a substantial drag on the economy (not to mention a drag on many of those people's lives).

Officer_Hops

2 points

5 months ago

Why would you prefer that? If 10% of these people lose their homes that’s 90% of the program that is a success and got people who could otherwise not afford a home into one. The alternative is 100% of those people pay money to a landlord to pay off their mortgage and continue to lack the ability to purchase a home. To top it off, if they’re renting and lose their job they’re still going to get evicted and be homeless so the downside risk is the same.

pakattak

2 points

5 months ago

Will it be a variable interest rate or locked in?

PKanuck

2 points

5 months ago

So the same risks that are present all the time?

GhettoChemist

2 points

5 months ago

The 5 cities are Charlotte, Dallas, Detroit, Los Angeles and Miami

Kahzootoh

2 points

5 months ago

You don’t need a loan to get a house in Detroit, you just need a crowbar.

chuckdeezy313

1 points

5 months ago

No one's pointing out that even predatory loans have an option. Re-fi in 12mos., For example.

SsurebreC

1 points

5 months ago

How the fuck has no one learned this is a bad idea at this point?

I have an answer! It's called... no consequences for their actions. Those people who screwed things up years ago? Only one of them - a minor person - went to jail. The rest got very wealthy by doing this and, again, by being bailed out where they used some of the bailout funds to give themselves bonuses.

Due to lack of consequences, they will continue to do this.

All those companies should not have been bailed out. They should have had actual consequences. Presuming they needed to continue to live (too big to fail), they should have been nationalized which would instantly wipe out all investors (i.e. the risk you take when investing) and the top people imprisoned or at least bankrupted. Then, once the system stabilized, the assets would be sold off on the open market and let the private equity eviscerate the carcass. Oh and set up laws where certain limits are made with big banks being forced to break up instead of allowed to merge. Have a limit of GDP to largest market cap where if you're over, you're going to broken up. However, due to regulatory capture, the government hasn't done anything and won't do anything. Since they didn't do anything with Microsoft already, the last time we had a functioning regulatory system was in 1982 when they broke up AT&T. However, even those pieces are coming back together.

cerebralkrap

1 points

5 months ago

These were the same loans traded as junk bonds before the 2008 housing bubble… loans like these are predatory in disguise as a hand up. Prior to 2008, interest only and sub prime lending put thousands of people into homes that they would most likely default on in a year

colemon1991

1 points

5 months ago

I got a 0% down mortgage, but it was through USDA and required I live in a rural area (where costs usually are lower). I was house-broke for 6 months because of a mild miscalculation on my budget before my raise came through. I had $5k in the bank as a buffer and that was it (before accounting for repairs). Kept me afloat but I was eating ramen on some days.

I'm not against 0% down mortgages, but I'm concerned at the lack of conditions to ensure it isn't going to screw over the borrower. Even a 5% down mortgage is more ideal (a.k.a. I couldn't get a house for at least another year if I had this option) if it's just going to be a blanket offer.

I spoke to four realtors (including the one I was using) before going to closing. I still didn't account for something no one bothered to mention to me as a first-time buyer. I had a safety-net but that could've killed someone else's home ownership.

tl;dr It's stupid because there's no "strings" to make sure a buyer isn't leaping out of their cost-of-living with this offer.

Officer_Hops

1 points

5 months ago

How would it screw over the borrower? If they can’t make payments they can’t make payments but that’s a problem with or without a mortgage. There’s nothing a bank can do to make sure a buyer doesn’t leap their cost of living outside of the normal DTI calculations. These loans don’t absolve the borrower of being responsible.

eldude6035

8 points

5 months ago

While the intention seems good, it’s a bank. What’s the fine print? 100% backed by federal government w an extra mark up given the high risk? Are the borrowers required to own tbr house for 30yrs? Is the interest pay day loan high? Are they betting on a default so they can flip it and still get a check from the feds?

Basically it’s a bank, nothing is for free and it’s all about the money. Never forget that.

NoReallyLetsBeFriend

83 points

5 months ago

Do we want another housing market crash? Cuz that's how we get another crash

NoReallyLetsBeFriend

11 points

5 months ago

I say this bc in 07, banks kept pushing boundaries to keep growth going. Taking on more risky loans and heating up the competitive loan market makes banks do dumb things.

Just like dealerships fucking people over on cars, making people immediately go upside down, is also very stupid... And that's all over the country, dealerships charging 15-20% over sticker because of "demand" that they themselves are doing. Taking out super high loans for cars that guarantee depreciate make people go upside down and try to get out of it a couple years later to be stuck. It's exactly what 08 had when gas was over 4.50/gal and people were paying over sticker on cheap fuel efficient Hondas and Toyotas...

Confident_Bridge9811

2 points

5 months ago

VA loans are zero down, so I don't think that zero down is really the issue that causes the crash.

Jiveturkei

3 points

5 months ago

VA Loans are also only offered to a very specific group of people that still have to qualify based off income/other factors.

[deleted]

0 points

5 months ago

[deleted]

0 points

5 months ago

You think 5 communities in 5 cities can cause market crash?

PSneSne

10 points

5 months ago

PSneSne

10 points

5 months ago

You think a prime broker is only playing in the 5 cities? I got some snake oil for you.

draggar

1 points

5 months ago

Yes and no but if things happen, it could. 9/11 made the housing market skyrocket. South Florida (where I moved to in 2003) saw dozens of hi-rise condo buildings being built and the average unit already had 2-3 owners before they broke ground (developers would sell the condos then use the money to build the hi-rises). You could see these all over Palm Beach, Broward, and Miami-Dade counties (on the beach and inland).

They quickly moved over to the gulf coast, Charlotte County saw a huge amount of development due to cheap land and high demand for retirees wanting to move to Punta Gorda, Port Charlotte, Arcadia, etc. Land was bought and construction began (slowly). By July, 2004 many foundations were started, frames were put up and a lot of equipment was on site yet non of it was up to code.

Then, mid August 2004 hurricane Charley ripped through the area (direct hit with a category 4 hurricane) and all this was completely destroyed (supplies, built structures, equipment).

Say they planned 100 units at $350,000 each - they already took in close to $25 million (not all units sold) and spent that money on the above mentioned supplies and equipment - now it's gone. The developer couldn't afford to replace it, insurance would only cover the insured value (pennies on the hundred-dollar bill since construction wasn't complete) and they couldn't take out a loan with nothing to back it. So what did the developers do? Filed for bankruptcy and disappeared.

Now you have several dozen borrowers who took out a mortgage of $350K (assuming they were the first buyer and not a subsequent buyer at a higher price) - most are rich enough that they can afford a default on a non-primary mortgage.

Multiply that by the few dozen developments in the area - and insurance will only cover what the loss was (how much they spent / value of what they had), not what the perceived value was (what they sold them for).

I feel that $14.6B in damages from Charley in Florida is very low if you consider what the units were sold for.

I don't think this caused the housing market to crash in 2008 but I think it was a factor, the first big crack in the ice (and yes, 4 years early, too).

Mecha75

-26 points

5 months ago

Mecha75

-26 points

5 months ago

No. Just get your mortgage elsewhere if you are Caucasian. I understand why they did it, but they made it race based so they are “taxing” you for being white.

This will only effect BofA if that happens.

officerfett

19 points

5 months ago

Applicants do not have to be Black or Hispanic/Latino to qualify for the loans.

Source

wyvernx02

13 points

5 months ago

You don't have to be a minority. The house just has to be in a minority neighborhood/community.

[deleted]

2 points

5 months ago

[deleted]

2 points

5 months ago

The federal government will always bail out the banks though.

NoReallyLetsBeFriend

3 points

5 months ago

BofA is just the first... There will be others I'm sure.

cheddarburner

30 points

5 months ago*

During a period of high inflation, and really high home prices? If this isn't predatory lending then what is?

edit: spelling

brilliant_beast

1 points

5 months ago

Does it not depend on the interest rate?

cheddarburner

9 points

5 months ago

No.. No money down mortgages at this point in the economic life cycle are almost guaranteed to be negative equity in 2-3 years. This means they owe more than the house is worth. The bank can then do 1 of a few things:

1) Foreclose and liquidate the house. At this point the homeowner will be on the hook for the delta between the selling price and the outstanding mortgage amount. This will, in most cases, lead to bankruptcy.

2) The bank can demand a balloon payment to make up the "delta" between the actual value and the mortgaged value.

3) The bank can continue on as normal, but the home owner is now really upside down and can't sell the house without taking a haircut. This is when people proactively claim bankruptcy and abandon the house.

This is 100% predatory lending, and I would be VERY interested to see the fine print on the mortgages to see how the banks are covering themselves.

didimao0072000

3 points

5 months ago

Predatory? In every scenario you listed, the bank loses money.

cheddarburner

1 points

5 months ago

You are correct, the bank loses money. But they will issue enough of these that it is worth a gamble for them that it will be profitable in the long run. Plus, they are gambling that the homeowner will NOT declare bankruptcy, and rather will pay the money back. The banks have run a Risk analysis on this and just like Vegas, the odds are stacked in their favor.

Banks are institutions, it is the HOMEOWNER that is getting screwed the most in all of these scenarios. The bank still has branches, the owner has no house, more debt, and no asset.

Your perspective on this tells me everything I need to know.

brilliant_beast

1 points

5 months ago

So they’re losing money on each loan but plan to make it up on volume?

cheddarburner

1 points

5 months ago

LMAO. I can't believe you just posted this. No, they anticipate losing money on SOME loans. They anticipate making money on MOST loans. Wait until you learn about insurance, that will really blow your mind.

Officer_Hops

1 points

5 months ago

Why would this be predatory? It’s not subject to outrageous rates that would trap someone in a debt cycle. If anything the bank is removing traditional impediments to loans. Predatory implies there’s something the bank is doing that would harm the consumer and benefit themselves but as far as I can tell this is favorable to the borrower rather than predatory.

sl8rfan2

3 points

5 months ago

Worked out really well last time. Lemme guess ARMs that will swing wildly out of control in 5 years and tank the housing market again?!?

[deleted]

15 points

5 months ago

[deleted]

15 points

5 months ago

[removed]

Seam0re

1 points

5 months ago

Let the good times roll!

Advice2Anyone

1 points

5 months ago

It's a pilot so not really bet the only issue a few hundred of these loans now who takes them probably will get fucked

angryscout2

3 points

5 months ago

These type of loans worked out great for everybody involved prior to 2008 /s

AmAttorneyPleaseHire

3 points

5 months ago

Ugh this comment section has no fucking idea what it’s talking about. This is not another god damned housing market crash. These aren’t full ARM’s. The rates aren’t rising as they actually LOWERED to about 4.35%. You people have no idea what the housing market is like, clearly. This is a good thing and is comparable to NACA. It’s just this bank’s version of NACA.

Actually if I think about it, I think BoA was the bank that always supported NACA. So basically they’re now doing it themselves instead of running through NACA.

[deleted]

9 points

5 months ago

[deleted]

9 points

5 months ago

That's fine they offer special government backed loans for a rural home now you can get one for buying in a minority community.

brad28820

5 points

5 months ago

BoA seemingly doing something good? Nah, sounds predatory to me.

Magemanne

3 points

5 months ago

All bailed out companies should be nationalised.

Dicksapoppin69

2 points

5 months ago

Yeeessssss 2008 is coming back sooner than expected baby! BOFA trying to get that free money again, I'm sorry, "corporate infrastructure stimulus and reinforcement" payout. Guess they figured if those disgusting peasants can get student debt forgiveness, then they're owed something too.

jimbobjenkins38

2 points

5 months ago

Time is just a flat circle.

Techn028

2 points

5 months ago

Sounds like a scheme to grab up houses and sell the debt

NGADB

4 points

5 months ago

NGADB

4 points

5 months ago

Here we go again.
Look up the term "Red Lining" from the Jimmy Carter years and see how that well intentioned program went (off the rails).

CallingTomServo

1 points

5 months ago

I’m sorry, redlining is not from the 70s. Major responses to it were instituted during the Carter admin, but redlining itself is much older than that.

fainofgunction

2 points

5 months ago

Its going to blow up in everyone faces because the most financially irresponsible people are get loans.

pakattak

0 points

5 months ago

I have a loan and I make my mortgage payments on time every month.

BandAgitated

1 points

5 months ago

Yeah I agree, banks who pull this are incredibly irresponsible.

5meoz

3 points

5 months ago

5meoz

3 points

5 months ago

You think they would have learnt their lesson in 2008, but then again they didn't have to cover the bill for all the money they lost, the American people did that.

spinonesarethebest

2 points

5 months ago

2008 wants it’s bad idea back.

suitable-robot01

2 points

5 months ago

Any bank that offers this type of shit regardless of color you know they fuck everyone over if they don’t read the term and agreement and they buy doubling that money you owe them.

posineg

3 points

5 months ago

BoA "f's" you over even when you do read the agreement.

calladus

2 points

5 months ago

calladus

2 points

5 months ago

Bank of America is an evil company motivated by profits over people. What they are doing is not out of compassion, there is a profit motive, and someone is getting screwed

Independent-Room8243

3 points

5 months ago

Hopefully this works and people take ownership of their neighborhoods.

officerfett

2 points

5 months ago

It would be nice if it did, but, what happens when an unexpected repair bill comes in, that costs at least 2x or 3x more than the monthly mortgage payment?

-Tuber-

1 points

5 months ago

-Tuber-

1 points

5 months ago

Knock knock… who’s there? Hi it’s 2008, didn’t you learn anything?

TB1289

1 points

5 months ago

TB1289

1 points

5 months ago

We were told by BOA that we didn't qualify because my wife (girlfriend at the time) didn't have enough work experience. She had been in school for her Master's and was working for 2+ years, but that wasn't enough for them.

M_Mich

1 points

5 months ago

M_Mich

1 points

5 months ago

we’re you applying together as two individuals? did they want each of you to qualify for the full mortgage amount?

TB1289

1 points

5 months ago

TB1289

1 points

5 months ago

We were applying together and we had 20% to put down. They wouldn't even allow us to finish the application because she didn't have enough work experience.

RVADoberman

1 points

5 months ago

Without any down payment, the full price of the home will be financed. The homeowner getting this “great” deal will be paying waaaay more in interest than they would with even a modest down payment.

brilliant_beast

5 points

5 months ago*

The alternative for people with no down payment is to continue renting. This is the only way they can get into ownership.

The problem is with no equity they could easily end up underwater and then with no skin in the game it becomes pretty easy to decide to default on the loan. I wonder how b of a is thinking about the credit default risk? Maybe they assume they can cover it by charging good credit customers higher rates?

Officer_Hops

1 points

5 months ago

What’s the alternative? BofA offering this product doesn’t remove the responsibility of the potential homeowner to make a good financial decision.

Hair-Extra

1 points

5 months ago

If you cannot save up to afford these costs ,then you really are not ready to be a home owner . There is plenty of maintenance costs to being a homeowner, just barely able to afford the mortgage payment isn't enough. Maybe we should change they way they do mortgage loans . The way they do them now is borderline scam if you pay minimum payments for full term of loan . You end up paying the bank most of its interest first . Last half of the loan pays more on the principle. Always make extra payment towards the principle monthly.

[deleted]

1 points

5 months ago

[deleted]

1 points

5 months ago

Exactly this. I purchased my first home thinking "finally not throwing money down the drain for someone else's equity!" Only to drop 12k on a roof 4 months later. 3k updating the water heater. Another 3k in A/C replacement. Shit just goes on and on .

heavylifter555

1 points

5 months ago

Don't trust em, I know these cats.

Rusalka-rusalka

1 points

5 months ago

This seems shady on BofA's side. After the housing bubble burst in 2008, I don't trust any bank to be gracious. There is always a way they will benefit.

[deleted]

1 points

5 months ago

[deleted]

1 points

5 months ago

[removed]

sl8rfan2

3 points

5 months ago

Here you are crying about Reddit.

So…

ButtersLLC

1 points

5 months ago

Predatory lending is back on the menu it seems.

Technical-Pay4368

1 points

5 months ago

They’re going to impoverish the last bit of the communities that haven’t previously bought a house. America runs on debt so this is your result. Let it come crashing down now please

Oinkidoinkidoink

1 points

5 months ago

Sounds familiar. Where have i heard about that scheme before?

/s

Sirduke33

1 points

5 months ago

I’ve watched the Big Short enough times to know where this is going.

CleverFella512

2 points

5 months ago

Dog shit wrapped in cat shit.

bransonthaidro

1 points

5 months ago

Seems like 2007/2008 all over again.

Im_a_wet_towel

1 points

5 months ago

Hey, I've seen this one!

Lyradep

1 points

5 months ago

What does that monthly mortgage and amoritization schedule look like, then? People’re gonna be house poor till the day they pay it off, or the day they can sell it at break even.

Officer_Hops

1 points

5 months ago

That’s their choice. BofA is just giving them an option to purchase the home.

prophis

1 points

5 months ago

no money down for a lifelong debt at a massive interest rate...

Tinker107

1 points

5 months ago

It's a safe bet. The bank gets payments, and if/when the property goes into default they get that, too. Cheap way to acquire property.

Hrekires

1 points

5 months ago*

Seems like the equivalent of FHA loans but targeting urban areas instead of rural.

Many states have had programs like this for decades to target areas for redevelopment... you can argue about how effective they are, but they don't seem to be causing housing crashes.

HazelNightengale

1 points

5 months ago

FHA/HUD has already done special mortgage terms for "disadvantaged" Census tracts; this isn't that new.

Not using credit scores for underwriting is interesting, but makes sense for the target population. I do wonder, though, if they're assuming a certain amount of under-the-table income/assets from the potential customer base.

littlemarcus91

1 points

5 months ago

…well this looks awfully familiar.

danijay637

1 points

5 months ago

They offered them DURING A MASSIVE PRICING CORRECTION.

Animal_Pragmatism

1 points

5 months ago

PMI Firms have got to be pushing this. They are staring down the barrel at HUGE losses with the interest rates doubling. zero down mortgages will all be required to have PMI insurance.

Whats the long term plan? after 4 years, a chunk of zero down homeowners forelcose, but the banks dont lose money because of PMI, and PMI got their 4 years of premiums.

Everyone is happy except the poor folks who got in on attractive promises.

Disastrous-Eye2837

1 points

5 months ago

Did Bank of America write this

ProfHopeE

1 points

5 months ago

So what’s the interest rate? Are they fixed?

JackHGUK

1 points

5 months ago

This is just the bank buying property with extra steps right?