DALLAS — With the announcement of a new program, Bank of America hopes to make home ownership more obtainable in predominantly Black and Latino neighborhoods. The Community Affordable Loan Solution program will launch in five cities, including Dallas, Charlotte, Detroit, Los Angeles and Miami.

“Homeownership strengthens our communities and can help individuals and families to build wealth over time,” said AJ Barkley, head of neighborhood and community lending for Bank of America, in a prepared statement. “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.”

Bank of America’s program offers a zero down payment and zero closing cost mortgage solution for qualifying first-time homebuyers. It’s an incentive in a market that for that past couple of years remained largely a seller’s one. Between increased mortgage rates, the rising cost of inflation and home prices not to mention being in a pandemic, buying a home has largely remained difficult for the population this loan program targets. And according to the National Association of Realtors, pending home sales declined for the second consecutive month in July along with the eighth time in nine months.

“In terms of the current housing cycle, we may be at or close to the bottom in contract signings,” said NAR Chief Economist Lawrence Yun. “This month’s very modest decline reflects the recent retreat in mortgage rates. Inventories are growing for homes in the upper price ranges, but limited supply at lower price points is hindering transaction activity.”

The organization reported that housing affordability has dropped to its lowest since 1989. But, the NAR seems to show optimism for the future of home buying as it relates to the market eventually stabilizing.

“Home prices are still rising by double-digit percentages year-over-year, but annual price appreciation should moderate to the typical rate of 5% by the end of this year and into 2023,” Yun added. “With mortgage rates expected to stabilize near 6% alongside steady job creation, home sales should start to rise by early next year.”

It’s unclear when The Community Affordable Loan Solution program will start, but the Special Credit Purpose Program uses multiple factors to determine one’s eligibility. Factors including, but not limited to, on-time payments of rent, utilities, phone and auto insurance payments go into the credit guidelines. The program also doesn’t require a mortgage insurance or minimum credit score and individual eligibility centers on income and home location. Bank of America’s goal date of placing 60,000 individuals and families in affordable homes stands at 2025.

“Through this commitment, Bank of America has already helped more than 36,000 people and families become homeowners, having provided more than $9.5 billion in low down payment loans and over $350 million in non-repayable down payments and/or closing cost grants. To date, two-thirds of the loans and grants made through the Community Homeownership Commitment has helped multicultural clients to achieve homeownership,” Bank of America said in a press release.

For real estate expert Astin Scott, he applauds the Bank of America program expanding lending opportunities to more people of color. But, he also  encourages potential home buyers to explore all options before settling on one or the other.

“In most cases on the front end, you do have to have the closing costs and the amount that the down payment costs," he said. "But, traditionally, there was always DPA (down-payment assistance) programs, which came from the lender. Then you had incentives that were given to you from the seller that could be negotiated. So, even before Bank of America came out with its program, there were still options to where you could almost get down to zero out-of-pocket.”

Scott, who became a real estate agent just prior to the pandemic, has seen the whirlwind of changes in the housing market. It’s a market Scott insists no one can truly predict from month-to-month.

“When I came into the business, it was closer to a balanced market meaning that there was leverage on both the seller and buyer side,” Scott said. “So, when the pandemic hit, it kind of put things on hold. But, at the same time you still had buyers out here searching for properties.”

Although BOA didn’t specify which Black/African American and/or Hispanic-Latino neighborhoods, the program would pertain to, it does have its restrictions. Also, prospective home buyers must complete a homebuyer certification course prior to applying for the program.

“If you don’t want to be restricted to a certain area and you want to be able to be broad, but you’re still wanting that out-of-pocket assistance then I’d strongly consider DPA and going the generic route and then potentially negotiate funds from other places to help with the out-of-pocket costs,” Scott said. “However, you’ll be tied to everything else that’s generic with lending as far as credit and your DTI ratio. As far as with Bank of America, you may not be tied to all of those requirements.”

Location doesn’t seem to be the only restriction in the BOA program, according to Scott.

“What I saw with the program is that you can’t make more than 150% income of the median income in that neighborhood,” he said. “So, let’s say if that median income in that neighborhood is $50,000 and you’re making a $151,000, then they won’t allow you to buy in that neighborhood using that Bank of America program.”

Research from Texas A&M University’s Texas Real Estate Research Center shows more than 80,000 homes listed for sale in July compared to last year’s number of 55,668. The median home price in the state reached a peak in June with a value of $349,000— $3,000 below May, marking the first decrease in home prices since December 2020. Back in June, more than 37,000 homes were sold in Texas just 9.4% below sales this time last year. Despite the numbers, the TRERC suggests that even though the market seems to be turning a corner, current home prices remain “significantly higher than before the pandemic.”