A major financial outlet last week warned that a controversial lending scheme from Bank of America aimed at helping black and Hispanic homebuyers could actually negatively impact them.
Bank of America’s so-called Community Affordable Loan Solution offers loans with no down payments and no closing cost, The Daily Wire reported last week. The bank is specifically targeting black and Hispanic neighborhoods across the nation and requiring no minimum credit score for participants.
MoneyWise, a financial site reaching millions of readers a month, warned that the program could easily “backfire.”
“While credit scores aren’t always an accurate barometer of a buyer’s purchase power or ability to make timely payments, advocates worry the interest rates required to make up for the low bar the lender is setting could set minority buyers up for failure,” MoneyWise explained.
Harkening back to the 2008 housing crisis, the financial site noted that much of the issues were driven by banks doling out risky loans to unqualified buyers.
Notably, Bank of America was bailed out by tens of billions of dollars by the American taxpayer due to the crisis.
The Community Affordable Loan Solution program seems to be replicating the problems, the site suggested.
“It’s likely that at least some of the borrowers under Bank of America’s new program would be considered ‘subprime’ under ordinary lending rules — recalling the ugliest days of the 2008 crisis and supplying critics with easy talking points,” MoneyWise explained.
Meanwhile, the bank is championing the program as a leg-up for minorities.
“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,” boasted A.J. Barkley, head of neighborhood and community lending for Bank of America.
Criticism of the bank program goes beyond its functionality; some online blasted the lender for the racially-charged focus and seeming exclusions.
For example, commentator Steve Cortes, who also served as a campaign spokesman for former President Trump, called the program racist.
“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, The Daily Wire highlighted. “Now…BofA pays you back with an explicitly race-based lending program that overtly discriminates against white people. Had enough???”
Attorney Harmeet Dhillon added the program could potentially violate the federal Consumer Credit Protection Act and California’s Unruh Act, a 1959 law that prohibits businesses from discriminating against consumers based on various factors including race, color, religion, ancestry, and national origin.
Greg Wilson contributed to this report.