Dallas is one of the cities selected for Bank of America’s new “Community Affordable Loan Solution” pilot program, designed to help modest-income and first-time homebuyers obtain affordable mortgage loans.
The Charlotte-based bank said its new program would target specific markets in Charlotte, Dallas, Detroit, Los Angeles, and Miami.
The program qualifies as a Special Purpose Credit Program, meaning the bank will screen borrowers based on particular credit indicators like timely rent, utility, phone, and auto insurance payments, according to a statement by Bank of America.
The new program does not require mortgage insurance or a minimum credit score but bases eligibility on factors like income and home location.
“Homeownership strengthens our communities and can help individuals and families to build wealth over time,” said AJ Barkley, head of neighborhood and community lending for Bank of America.
Throughout the country, the homeownership gap has widened for many Americans. Average home prices in 2022 are at record highs, while average hourly earnings have lagged, increasing a modest 0.3% in August, according to the latest Employment Situation report.
Nationwide, home prices increased 18.0% annually in June, according to the latest date from the S&P CoreLogic Case-Shiller Indices.
Bank of America’s new program requires borrowers to complete a homebuyer certification course and receive housing counseling before mortgage applications can be submitted.
The program will boost Bank of America’s existing $15 billion commitment to helping individuals and families obtain affordable mortgages.
The financial institution plans on offering affordable mortgages, grants, and educational opportunities to 60,000 individuals by 2025, according to a press release. Based on the success of the new pilot program, Bank of America plans to expand it to additional markets in 2023.
In May, the Dallas City Council approved Ordinance 3221, a “responsible banking ordinance” that allegedly holds certain banks “accountable” for the types of loans they make to individuals in moderate to low-income communities.
These types of ordinances are intended to leverage responsible loans, investments, and services from financial institutions receiving municipal deposits and other city business, according to a National Community Reinvestment Coalition report.