BoA Zero Down, No Closing, and No PMI, No minimum credit score

[Joseph Beilke]

So BoA is starting to promote a programs in 5 cities around the country where they will only use income and payment history of phone, utilities,  past rent payments and few other unwriting practices to qualify a buyer.  It was first pushed as a program geared toward Black and Hispanic buyers only, but has sense redacted that and said it's for all buyers in those cities.  Talked with my wife/Broker, I asked her if she thought is was redline to promote those buyer into current neighborhoods.  Her very broker answer was, "lenders have different rules than us, and I don't think the legal department of BoA would promote this if they thought it broke rules or fell in a gray area".  So that got me thinking a little bit, and asked myself does it fall in the same category a USDA loans?  

My 1st question to the crowd is do you think its "fair" for a lender to only promote a program to certain cities?  

Question 2 is, do you think they are only promoting these cities because they are forecasting a large number of defaults and foreclosures in those cities and want to recapture those properties verse having them sit vacant or become derelict and losing value waiting for an investor?

Would love to hear everyone thoughts and input! 

[Caroline Gerardo]

Few more rules about the program: BofA has limited amount of money targeted for these cities and like grant money it will run out and have to be reviewed. Borrowers have same DTI qualifications as conventional loans (43 back ratio not the 51 of FHA). There is a political push to get low and moderate income people into homeownership. The targeted cities have vacant housing which isn't selling like Boise was last year.

It's not reverse redlining as not all of Dallas, Los Angeles or Miami is low income and has higher black or Hispanic populations so there is a grey area. The ads imply they don't targeted census track or drew a circle south of the railroad tracks to avoid repercussions. Some areas in those cities are not low or moderate they are luxury. Detroit maybe not so much...

USDA loans are more universal as they are determined by number of people counted in the track not their racial or economic location. USDA are full qualifying and you need an established FICO - rare to get one closed with someone who never used credit so that is different. Both this BofA and USDA are for owner occupants to stabilize homeownership.

Time will tell in the numbers.