BofA and BMO work to close the racial ownership gap

Bank of America and BMO Harris are leaning into real estate assistance with programs designed to close the racial land ownership gap.

Bank of America launched two programs on Tuesday — one to help small business owners and another for would-be owners.

The Small Business Down Payment Grant Program extends credit to small business borrowers in historically disadvantaged communities and provides financial support for the purchase of commercial real estate. Women and non-white business owners who apply for Small Business Administration (SBA) commercial real estate loans for opportunity areas in Atlanta, Chicago, Charlotte, Dallas and Los Angeles can access the grants, which can be used to cover up to half of the down payment, capped at $25,000.

The bank plans to expand the program geographically next year.

“Today, many business owners from diverse backgrounds lack access to the capital and technical assistance needed to qualify for business loans, which can help secure transferable assets that create equity. across generations,” said Jill Calabrese Bain, managing director of small businesses, specialty bank. and loan to Bank of America.

Only 3% of black households own nonresidential commercial real estate, Brookings reported in July. That compares to 8% of white households. Moreover, for households that do, there is a wide disparity in value: the average black household owns $3,600; the average white household, $34,000.

Applicants to the program announced on Tuesday must pay at least 5% of the deposit and must be able to prove that at least 51% of the business is owned by women or non-white people.

Bank of America’s Community Affordable Loan Solution, meanwhile, offers a no-down payment, no-closing-cost mortgage solution for first-time buyers buying homes in select Black and Latinx neighborhoods of Charlotte, Dallas, Detroit, Los Angeles and Miami. .

The program uses credit guidelines based on factors such as timely rent, phone, and car insurance payments. Prospective buyers do not need to have mortgage insurance or a minimum credit score, but must complete a homebuyer certification course through a Bank of America approved housing counseling partner and the Department of Housing and Urban Development before submitting an application.

The program builds on Bank of America’s $15 billion community homeownership commitment, which launched in 2019 and aims to provide affordable mortgages, grants and education to help some 60 000 low-to-middle income individuals and families to buy their own homes by 2025.

The National Association of Realtors reported in February a nearly 29 percentage point gap in homeownership between white and black Americans. This gap is 21 percentage points between white and Hispanic Americans.

“Homeownership strengthens our communities and can help individuals and families build wealth over time,” said AJ Barkley, head of neighborhood and community lending for Bank of America. “Our affordable community loan solution will help make the dream of sustainable homeownership accessible to more Black and Hispanic families, and it’s part of our broader commitment to the communities we serve.”

The launch of the Bank of America programs coincides with the expansion of BMO Financial Group’s Welcome Home Grant down payment program to Chicago and Phoenix. The program, which since March has been providing grants that eligible homeowners can use for down payment and closing costs, aims to help underserved communities access the credit needed for homeownership.

The bank has extended the program through Oct. 31, and applicants in Chicago and Phoenix are eligible for up to $20,000. Eligible homebuyers must contribute a minimum of $1,000 to lock in a 30-year fixed rate mortgage.

“Expanding this program provides critical resources to help revitalize underserved neighborhoods, helping the communities we serve make real financial progress,” said Bernard. Nostrilregional president of Chicago South and Arizona at BMO. The grant “embodies our commitment to a thriving economy, a sustainable future and an inclusive society in all the communities we serve,” he said.

These programs stand in contrast to the persistent shortcomings in accepting racially determined mortgage applications that have historically plagued the industry. Wells Fargo is in hot water, with a lawsuit from Aaron Braxton, a black man from California, who alleges the bank’s lending algorithms disproportionately deny refinancing to black applicants.

Bloomberg reported this year that the bank turned down more than half of all refinance applications submitted by black people in 2020. A Wells Fargo representative told The New York Times in March that it “helped more black homeowners to refinance their mortgage than any other major bank. in 2020 and has not commented on Braxton’s lawsuit.

About Wanda G. Warren

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