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Bank of America mortgage plan offering BIG perks for homebuyers in black, Hispanic communities sparks firestorm

September 1, 2022 | | Print Article

Twitter is currently on fire over an announcement from Bank of America regarding a new mortgage program that offers first-time homebuyers zero down payments and no closing costs (even if your credit is abysmal) as long as they purchase a home in communities that are, in the majority, considered to be black or Hispanic.

The new mortgage option, called the “Community Affordable Loan Solution,” will be rolled out in select markets as part of the financial institution’s “$15 billion Community Homeownership Commitment.”

“Bank of America today announced a new zero down payment, zero closing cost mortgage solution for first-time homebuyers, which will be available in designated markets, including certain Black/African American and/or Hispanic-Latino neighborhoods in Charlotte, Dallas, Detroit, Los Angeles and Miami,” B of A said in a Tuesday press release.

In response to the news, former Trump Campaign advisor Steve Cortes asked followers on Twitter if they’ve “had enough.”

“Hey Americans who happen to be white: You bailed out Bank of America when they (and every other big bank) nearly collapsed the economy,” Cortes tweeted. “Now…BofA pays you back with an explicitly race-based lending program that overtly discriminates against white people. Had enough???”

It’s a valid question, given the advent of “Environmental, Social, and Governance” criteria, more commonly known as ESG scores, and Critical Race Theory (CRT), which, combined, have been dividing the nation in the name of “equity” and “inclusion.”

White men are being told they are “toxic,” white kids are being told they are born racists, and, just this week, a former American Express employee launched a class-action lawsuit against American Express for allegedly discriminating against white employees in the wake of George Floyd’s 2020 death.

So, clearly, the answer for many to Cortes’s question is a resounding “yes!”

Indeed, the fury among Caucasian Twitter users is palpable.

“Is there a non-racist non-woke bank?” asked one angry user.

The legality of a program that appears to blatantly discriminate against white homebuyers was immediately called into question.

“How is this legal?” asked former California Congressional candidate David Giglio. “This seems like a situation ripe for a Class Action lawsuit.”

The answer rests right in B of A’s press release.

“The Community Affordable Loan Solution is a Special Purpose Credit Program which uses credit guidelines based on factors such as timely rent, utility bill, phone and auto insurance payments,” the release states. “It requires no mortgage insurance or minimum credit score. 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.”

So, what is the “Special Purpose Credit Program”?

Well, according to the FDIC’s “interagency” reminder, it allows creditors “the ability under the Equal Credit Opportunity Act (ECOA) and Regulation B to establish special purpose credit programs to meet the credit needs of specified classes of persons.”

“Many financial institutions have publicly committed billions of dollars to better meet the needs of underserved communities, and the statement calls attention to the special purpose credit options under ECOA and Regulation B,” the letter, which applies to “all FDIC-supervised financial institutions,” states.

“On December 21, 2020, the CFPB [Consumer Financial Protection Bureau] issued an Advisory Opinion (AO) on special purpose credit programs to clarify the content that a for-profit organization must include in a written plan that establishes and administers a special purpose credit program under Regulation B,” the agencies note. “In addition, the AO clarified the type of research and data that may be appropriate to inform a for-profit organization’s determination to establish a special purpose credit program to benefit a specified class of persons.”

And don’t worry: The FDIC states the policy doesn’t “generally” violate the rules set forth by the Fair Housing Act (FHA).

“Previously, some stakeholders expressed uncertainty as to the treatment of ECOA and Regulation B special purpose credit programs under the Fair Housing Act (FHA),” the agencies assure lenders. “On December 7, 2021, HUD released guidance concluding that special purpose credit programs instituted in conformity with ECOA and Regulation B generally do not violate the FHA. Accordingly, creditors may consider the use of special purpose credit programs across all types of credit covered by ECOA and Regulation B.”

So, while anger is most certainly justified, users on Twitter may be misplacing theirs.

The AO that allowed this obviously discriminatory mortgage program to happen came while Donald Trump was in office, and the Biden administration gave it the thumbs up.

“This new program is in addition to and complements Bank of America’s existing $15 billion Community Homeownership Commitment™ to offer affordable mortgages, industry-leading grants and educational opportunities to help 60,000 individuals and families purchase affordable homes by 2025,” Bank of America proclaimed. “Through this commitment, Bank of America has already helped more than 36,000 people and families become homeowners, having provided more than $9.5 billion in low down payment loans and over $350 million in non-repayable down payment and/or closing cost grants.”

“To date, two-thirds of the loans and grants made through the Community Homeownership Commitment has helped multicultural clients to achieve homeownership,” the financial giant added.

Though many online believe the mortgage option is only available to black and Hispanic loan applicants, the truth is, according to USA Today, “people do not need to be Black or Latino to qualify for the program.”

However, applicants must be seeking to purchase a home “located in census tracts that are more than 50% African American and/or Hispanic Latino.”

While Twitter users are fuming over the racial implications, many are, it appears, missing the bigger story: This is another example of a private-public partnership between an agency of the U.S. government and a corporation that holds sway over millions of people’s lives.

The requirement that eligible applicants “must complete a homebuyer course from Bank of America and Department of Housing and Urban Development-approved partners” is the very definition of economic fascism.

Melissa Fine
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