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ESG-supporting Bank of America offers zero down payment, zero closing cost mortgages – but only for black and Hispanic communities

The Bank of America Corporation announced new zero down payment, zero closing cost mortgages – but the offer is only available for black and Hispanic communities.

On Tuesday, Bank of America rolled out a new “special purpose credit program” called the “Community Affordable Loan Solution.” Bank of America said that the zero down payment, zero closing cost mortgages will only be available to first-time homebuyers in “black/African American and/or Hispanic-Latino neighborhoods in Charlotte, Dallas, Detroit, Los Angeles, and Miami.”

The press release from Bank of America did not mention that the offer was available to other minority communities, such as Asian, Native American, or Pacific Islander. The lender also did not make the offer to white communities.

“Homeownership strengthens our communities and can help individuals and families to build wealth over time,” said AJ Barkley, head of neighborhood and community lending at Bank of America. “Our Community Affordable Loan Solution will help make the dream of sustained homeownership attainable for more black and Hispanic families, and it is part of our broader commitment to the communities that we serve.”

Barkley told Bloomberg that applicants don’t need to disclose their race. The megabank will utilize U.S. Census data to determine which eligible neighborhoods are predominately black or Hispanic.

ESG-supporting Bank of America said, “The Community Affordable Loan Solution aims to help eligible individuals and families obtain an affordable loan to purchase a home.”

The advantageous mortgage program will not use credit scores, but instead will be “based on factors such as timely rent, utility bill, phone, and auto insurance payments.”

NBC News noted, “The loans require no mortgage insurance — the additional fee typically charged to buyers who put down less than 20% of the purchase price.”

Bank of America stated, “Individual eligibility is based on income and home location.”

Bank of America justified the enticing mortgage program by citing a report from the National Association of Realtors that found that the homeownership rate for black Americans was nearly 30% less than white Americans in 2020. The gap between white Americans and Hispanic Americans was nearly 20 percentage points.

The report also noted that Hispanic American homeownership is at an all-time high and above 50% for the first time. In addition, the report said that Asians were the racial group least likely to be rejected for mortgage loans.

According to data compiled by Bloomberg, “Approval rates for homeowners looking to lower their payments have also varied by race, with BofA approving 66% of black refinancing applicants and 78% of white ones in 2020.”

There is no minimum or maximum loan size under the Community Affordable Loan Solution.

Bank of America did not specify the scope of the program.

Bank of America also announced the launch of a new “Small Business Down Payment Program.” The special purpose credit program will cater to minority and women business owners in an effort to “help create generational wealth opportunities” for “historically disadvantaged small business borrowers.”

The National Fair Housing Alliance defines special purpose credit programs as “a way for financial institutions to meet the special credit needs of people who have been impacted by lending discrimination, systemic racism, and redlining.”

In February, the Bureau of Consumer Financial Protection (CFPB) – “an independent bureau within the Federal Reserve System” created after the Great Recession that “empowers consumers with the information they need to make financial decisions in the best interests of them and their families” – urged “lenders to explore opportunities available to them to increase credit access through special purpose credit programs (SPCPs) to better serve historically disadvantaged individuals and communities.”

Brian Moynihan is the CEO of Bank of America and the chairman of the World Economic Forum’s International Business Council.

Bank of America boasts of a collaboration with the WEF “to support social and environmental progress through investment, philanthropy, and responsible business operations.”

In May, Moynihan told Financial News that the transition to ESG is a “big business opportunity” for the bank.

In March, Politico noted that Moynihan had “pushed an environmental, social, and governance agenda that seems to be working for shareholders” since he was named the CEO of Bank of America.

A blog post on the Bank of America website posted in January 2021 reads: “While profits and shareholder value remain vital, stakeholder capitalism places a high value on environmental, social and governance (ESG) issues. Stakeholder capitalism repositions capitalism to play an essential role in solving climate change, poverty, hunger, and other challenges outlined in the United Nations Sustainable Development Goals (SDGs).”

u201cCEO Brian Moynihan talks about the importance of standardized #ESG metrics and how the private sector can lead the charge while supporting #stakeholdercapitalism. Watch the @WEF replay here: #DavosAgendau201d

— Bank of America News (@Bank of America News)

In October 2020, the WEF applauded Moynihan for “driving the creation of the ESG metrics, a special set of metrics related to environmental, social and governance issues that help companies measure how they’re doing well for society.”

At the same time, Moynihan wrote on the WEF website, “Clear signals that corporations are focused on environmental, social, and governance (ESG) priorities at the same time they are providing great shareholder returns is what our employees, clients, customers, and society need.”

Reuters reported on Wednesday, “Bank of America Corp. is expanding its newly formed environmental, social and corporate governance (ESG) advisory and financing solutions team with four new hires, according to an internal memo seen by Reuters.”