Misleading claim of racial limits for mortgage program


The claim: Post implies that Bank of America launched a program just for black and Hispanic home buyers

August 30, Bank of America announced a new program offering loans with no down payment and no closing costs for first-time home buyers in specific black and Hispanic communities in the United States

Social media users reacted strongly to the news, but the response was mixed. Some celebrated the program for trying to improve homeownership rates for Black and Latino households, while others were wary.

“Bank of America offers zero percent closing costs and down payment for mortgages to black and Hispanic people,” claims a September 1 Facebook post which has been shared 67 times in three weeks.

A similar post from September 1 was shared more than 22,000 times in two weeks, but it was deleted after USA TODAY contacted this user.

Commenters on both posts interpreted the description to mean that the program was off limits to other racial or ethnic backgrounds.

“It’s redlining 2.0!!!” said one commenter, referring to a practice now illegal which furthered the segregation of communities when banks only lent money to shoppers in certain neighborhoods based on their race.

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However, both messages are potentially misleading about the nature of the program. Bank of America said that while the program aims to improve homeownership for Black and Hispanic households, race is not a factor in determining who is eligible. Instead, the program is only available in specific neighborhoods with large minority populations.

Race does not factor into program eligibility

Bank of America launched the Community Affordable Loan Solution program to help address “the unique challenges and needs faced by minority homebuyers,” a company spokesperson said in a statement to USA TODAY.

But race is not taken into account in determining who is eligible for the program.

“Eligibility is based on income and residence, not race,” the statement said.

Eligibility is limited to first-time home buyers in specific neighborhoods in Charlotte, NC; Dallas; Detroit; Los Angeles and Miami and also takes into account payment history on expenses such as rent, utilities and car insurance. The race is not listed in the eligibility criteria in the ad.

Bank of America used U.S. Census data to help identify communities where the program would be in place, according to the announcement.

A press release announcing the program noted the racial gaps that exist among American homeowners. According to National Association of Realtors White Americans had a homeownership rate of 72% in 2020, 20 percentage points higher than Hispanic Americans and nearly 30 percentage points higher than Black Americans.

The program “will help make the dream of sustainable homeownership accessible to more Black and Hispanic families,” AJ Barkley, head of neighborhood and community lending for Bank of America, said in the press release.

Programs are legal and encouraged by federal agencies

Some comments on the posts give the impression that Bank of America is on questionable legal ground, but its actions are in line with this year’s guidelines from the federal government.

The Consumer Financial Protection Bureau, the Department of Housing and Urban Development and five other agencies signed a letter in February encouraging lenders to use special purpose credit programs to improve access to credit for minority households and businesses. Other lenders were already using such programs to provide targeted loans to homebuyers in minority communities, including TD Bank and Chase Lending, prior to Bank of America’s announcement.

According July 19 Publish of the Consumer Financial Protection Bureau, special schemes are authorized under the Equal Credit Opportunity Act of 1974 and Regulation B “to meet particular social needs”. Both the Consumer Affairs Office and the Housing Department have issued guidelines to help lenders design special compliant programs for homebuyers.

PolitiFact too debunked the claim.

Our opinion: Missing context

Based on our research, we assess the MISSING CONTEXT the implication that Bank of America has launched a new program just for black and Hispanic homebuyers. Although the program targets black and Hispanic communities, income and location are the main factors determining eligibility. The race and ethnicity of individual applicants is not a factor in the approval process.

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