Yahoo Movies Fact check: New mortgage program not limited to Black and Hispanic home buyers
The claim: Post implies Bank of America launched a program only for Black and Hispanic home buyers
On Aug. 30, Bank of America announced a new program offering zero down payment, zero closing cost loans for first-time homebuyers in specific Black and Hispanic communities in the U.S.
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 is offering zero percent closing costs and down payments for mortgage loans for black and Hispanic ppl," claims a Sept. 1 Facebook post that was shared 67 times in three weeks.
A similar Sept. 1 post was shared more than 22,000 times in two weeks, but it was deleted after USA TODAY contacted that user.
Commenters on both posts took the description to mean the program was off-limits to other racial or ethnic backgrounds.
"It’s redlining 2.0!!!" said one commenter, referencing a now-illegal practice that fostered segregated communities when banks only lent money to homebuyers in certain neighborhoods based on race.
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Both posts are potentially misleading about the nature of the program, however. Bank of America said that while the program does aim 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 not a consideration in program eligibility
Bank of America launched the Community Affordable Loan Solution program to help address “the unique challenges and needs that minority homebuyers face, a company spokesperson said in a statement to USA TODAY.
But race is not considered when determining who is eligible for the program.
"Eligibility is based on income and home location, not race," the statement said.
Eligibility is limited to first-time homebuyers in specific neighborhoods in Charlotte, North Carolina; Dallas; Detroit; Los Angeles and Miami and also considers payment history on expenses such as rent, utilities and auto insurance. Race is not listed as part of the eligibility criteria in the announcement.
Bank of America used U.S. Census data to help identify the communities where the program would be in place, according to the announcement.
A news release announcing the program noted the racial gaps that exist among American homeowners. According to the National Association of Realtors white Americans had a 72% homeownership rate in 2020, 20 percentage points higher than Hispanic Americans and almost 30 percentage points higher than Black Americans.
The program "will help make the dream of sustained homeownership attainable for more Black and Hispanic families,” AJ Barkley, head of neighborhood and community lending for Bank of America, said in the news release.
Programs are legal and encouraged by federal agencies
Some comments on the posts leave the impression that Bank of America is on questionable legal ground, but its actions are in line with guidance this year 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 minority households' and businesses’ access to credit. Other lenders were already using such programs to provide targeted lending to homebuyers in minority communities, including TD Bank and Chase Lending, before Bank of America’s announcement.
According to a July 19 post from the Consumer Financial Protection Bureau, special programs are allowed under the 1974 Equal Credit Opportunity Act and Regulation B “to meet special social needs.” The consumer bureau and the housing department have both issued guidance to help lenders design compliant special programs for homebuyers.
PolitiFact also debunked the claim.
Our rating: Missing context
Based on our research, we rate MISSING CONTEXT the implication that Bank of America launched a new program only for Black and Hispanic homebuyers. While the program is targeted at Black and Hispanic communities, income and location are the primary factors in determining eligibility. Race and ethnicity of the individual applicants is not a factor in the approval process.
Our fact-check sources:
Bank of America spokesperson, Sept. 8-9, Email exchange with USA TODAY
Bank of America, Aug. 30, Bank of America Introduces Community Affordable Loan Solution™ to Expand Homeownership Opportunities in Black/African American and Hispanic-Latino Communities
Office of the Comptroller of the Currency, Feb. 22, Fair Lending: Interagency Statement on Special Purpose Credit Programs
Consumer Financial Protection Bureau, July 19, Using special purpose credit programs to serve unmet credit needs
PolitiFact, Sept. 6, Bank of America’s new home loan program does not exclude any race, despite claims that say otherwise
National Association of Realtors, Feb. 23, U.S. Homeownership Rate Experiences Largest Annual Increase on Record
Axios, Sept. 6, Why "zero-down" mortgages are gaining ground
National Home Ownership Conference, June 26, Special Purpose Credit Programs and closing the homeownership gap
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This article originally appeared on USA TODAY: Fact check: Misleading claim of racial limits for mortgage program
