The Cookout

Rollie Forbes said:

Bank of America: Zero-down-payment mortgage for first-time buyers

Residents in selected Charlotte, Dallas, Detroit, Los Angeles and Miami neighborhoods will be offered the program first.

www.nbcnews.com

Bank of America said it is now offering first-time homebuyers in a select group of cities zero down payment, zero closing cost mortgages to help grow homeownership among Black and Hispanic/Latino communities.

The option will first become available in certain neighborhoods in Charlotte, Dallas, Detroit, Los Angeles and Miami. The new mortgage, called the Community Affordable Loan Solution, aims to help eligible individuals and families obtain an affordable loan to purchase a home, the bank said.

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0% down, 0 closing costs sounds good at first glance but you're really wrapping a noose around your wallet's neck. Because if you're buying a $500,000 house with 0% down which means you have ZERO equity.

Even if you could qualify for this program it sounds like a bad buy. If they really want to help they need to give grants to Black Americans. Give us a grant for 20% on a house in a particular tract or up to a particular value like median house in a given area.

I think this may be a means to get people into the homes they will be foreclosing on in the near future. They foreclose on it, give a loan to a person who typically wouldn't qualify, group it up into a tranche, and sell it off to institutional investors. '

Or if they don't off-load the loans they will use the monthly payments as bridge liquidity, foreclose at a later date, and sell the house again. Similar to the contract loans they used to give in the 50's when the FHA said "No loans to Blacks".