8 ms·

Bank of America just launched a zero down payment mortgage in 21 cities

21 points by mjaques 4y ago

steveharman 4y ago
Because easy-to-get US mortgages never caused any problems
- sadris 4y ago
  https://www.takimag.com/article/the-wisdom-of-dan-quayle/ https://www.takimag.com/article/the-wisdom-of-dan-quayle/ > The GOP was in the White House when the Housing Bubble was brewed up in 2002–2005. President George W. Bush strongly pushed the finance industry to lend more to nonwhites at his Oct. 15, 2002, White House Conference on Increasing Minority Homeownership. There he told his federal regulators not to worry so much about traditional credit standards regarding down payments and documentation of income because he wanted to see 5.5 million more minority homeowners by 2010. ... > Angelo Mozilo, CEO of Countrywide Financial...wanted to boost Countrywide’s share of the national mortgage market from 10 percent to 30 percent. He believed he could safely do that by increasing lending to marginal customers, especially Hispanics. ... In 2003, Mozilo, citing Bush’s push for minority home ownership, pledged to a Harvard audience that Countrywide would lend $600 billion to minority and lower-income borrowers by 2010. In 2005, he boosted that promise to one trillion dollars. ... Countrywide went under in 2008. ... > For example, a 2015 paper by Lin, Liu, and Xie found that in a sample of 18,000 households: The difference in the mortgage delinquency rates between immigrants (15.7%) and natives (4.4%) is significant. > Similarly, a 2013 paper by Luea, Reichenberger, and Turner revealed 2009 default rates for whites of 3.4 percent, blacks 11.3 percent (3.3 times the white rate), and Hispanics 16 percent (4.7 times the white rate) > A 2013 paper by Reid featuring data from the fifty largest metro areas for mortgages originated just in 2005 shows that foreclosure rates by 2009 were twice as bad for blacks as whites and almost three times as bad for Hispanics as whites. By 2010, 10.5 percent of Hispanics were in foreclosure versus 4 percent of whites. > According to Zillow, Hispanic neighborhoods nationally exploded in price by 280 percent from 2000 to 2006 versus about 160 percent for white neighborhoods. Remarkably, by the peak of the Bubble, the median home in a Hispanic neighborhood was worth almost a hundred thousand dollars more than the median home in a white neighborhood. Not surprisingly, the decline in home value from peak to trough was almost twice as severe in Hispanic neighborhoods as in white neighborhoods. > In summary, immigration was seen as a vast boon to the housing market until it turned out that Hispanics tended not to be able to afford the huge mortgages they had been given. At that point in 2008, housing prices in several high-priced Hispanic-heavy states, such as California and Florida, plummeted, taking down financial institutions like Lehman Brothers, Washington Mutual, and Countrywide Financial. This carnage set off a national recession even in places without a Housing Bubble. > Santayana famously said, “Those who cannot remember the past are condemned to repeat it.” But what if you haven’t forgotten it because you never had a clue in the first place?
  - camgunz 4y ago
    This stuff is basically all true, and I'll add that it started in the Clinton years. Dems wanted to open up homeownership to minorities, Republicans wanted more mortgages, it was a pretty perfect policy, then they forgot to regulate the mortgage industry. The documents that came out of banks revealing predatory lending tactics are... basically evil.
logicalmonster 4y ago
Different media outlets have publicized this story by claiming that this program was just for Black and Latino buyers (pretty racist for a company to sell different products and have different policies for people based on race), while this story says that this program is in historically Black and Latino neighborhoods. Kind of a difference if it's open to all people or not. Which is it? Personally, I'd say that the ''bankers'' are using the guise of ''helping the people of color'' to actually prey on them. This is a slam dunk setup for another government bailout (''Help us Uncle Sam, so many people defaulted on their loans, nobody could see this coming.'') as well as taking control of lots of property during the next economic downturn.
- joemazerino 4y ago
  Precisely! Also helps to tap into government subsidies by helping minorities. Both racist and predatory.
- cercatrova 4y ago
  The US government made money from the 2008 bailout. I don't understand why people think it was free money to the banks. No, they were loans that were fully paid back with interest.
  - ericns 4y ago
    - cercatrova 4y ago
      Nowhere in this article is there a relation to bank bailouts. And I don't need your snide quips either.
      - logicalmonster 4y ago
        > Nowhere in this article is there a relation to bank bailouts. Of course there is (when you remember the 2008 housing crash and think a step or two ahead) During good times, putting lots of poor-ish people into homes they can just barely afford is a feel-good story. During bad times, when people get laid off and many of these people can likely no longer afford their home, it creates a shit-storm of epic proportions that negatively affects everybody.
throwaway_4ever 4y ago
It seems to me a huge bank like Bank of America is well-capitalized to start a huge investment project into a troubled area of a city that will: 1. provide wealth to it's residents 2. fix crime and blight 3. help alleviate housing affordability crisis Right now, a troubled area might have housing wealth be 1/4 of a nearby affluent area. But generally, this is simply because of crime and bad schools due to the cycle of poverty. If you're able to quickly alleviate the crime and poverty, suddenly that troubled area is basically as desirable for housing as the rest of the area. Now, usually, this "gentrification" process has happened slower, over decades, and without the corresponding wealth accrual of its current residents. So it doesn't work out for the current residents and the clash between people is much harsher. But what if all the wealth that was created when a $300k East Oakland home becomes $1m, was equally shared between investment and residents? Could you pay people (give them some type of community job) and/or make sure everyone has housing equity, to break that cycle, stop the crime, so that everyone wins? It feels doable if tackled on a large scale, what am I missing?
- IshKebab 4y ago
  You're missing the fact that gentrification is caused by the movement of people, and that always takes a very long time. Crime goes down in gentrified areas because the criminals can't afford to live there anymore.
- tarakat 4y ago
  > But generally, this is simply because of crime and bad schools due to the cycle of poverty. What makes the schools bad, if they receive on-average marginally higher per-pupil funding than mostly-white schools [1]? [1] on average, both Black and Latinx total per pupil expenditures exceed White total per pupil expenditures by $229.53 and $126.15 - https://journals.sagepub.com/doi/full/10.1177/2332858419872445 https://journals.sagepub.com/doi/full/10.1177/23328584198724... - I can't find a source now, but the average per-pupil funding is around $20,000, so a difference of $200 is negligible. If you're surprised that the funding is almost the same, despite schools being funded by property taxes, which are much higher in whiter neighborhoods, that's because you were hoodwinked by the media. Schools are funded by local property taxes and state taxes, with the latter distributed to even-out the funding. For some mysterious reason, the latter funding source receives much less coverage than the former.
dkobia 4y ago
As always a token of good faith from bankers only makes sense when viewed through the lens of Gordon Gekko - “It’s all about bucks, kid. The rest is conversation.”
camgunz 4y ago
Quick reminder to everyone in the thread that this isn't an example of reverse racism, which doesn't exist, nor is it an example of racism, which would require that BofA consider Black and Latino mortgage seekers as superior to Whites based on their race. Not to be all Eeyore, but it's a little exhausting to have any post about any race-conscious action get bogged down by commenters who haven't even read the Wikipedia pages for racism and reverse racism. There's an interesting discussion to be had about these kinds of policies: - housing as infinitely growing store of wealth is probably bad, is it a good idea to get more people on that train? Is it unfair to effectively bar Black and Latino mortgage seekers from the gravy train? - is it a good idea to do this now, as we're descending further into a housing crisis, or are these markets more liquid than others - what are other non-credit-score measures of creditworthiness? Is credit even a good idea? Should the government just back things like mortgages, school, and auto loans? https://en.m.wikipedia.org/wiki/Racism https://en.m.wikipedia.org/wiki/Racism https://en.m.wikipedia.org/wiki/Reverse_racism https://en.m.wikipedia.org/wiki/Reverse_racism

21 points by mjaques 4y ago

steveharman 4y ago

Because easy-to-get US mortgages never caused any problems

sadris 4y ago
https://www.takimag.com/article/the-wisdom-of-dan-quayle/ https://www.takimag.com/article/the-wisdom-of-dan-quayle/ > The GOP was in the White House when the Housing Bubble was brewed up in 2002–2005. President George W. Bush strongly pushed the finance industry to lend more to nonwhites at his Oct. 15, 2002, White House Conference on Increasing Minority Homeownership. There he told his federal regulators not to worry so much about traditional credit standards regarding down payments and documentation of income because he wanted to see 5.5 million more minority homeowners by 2010. ... > Angelo Mozilo, CEO of Countrywide Financial...wanted to boost Countrywide’s share of the national mortgage market from 10 percent to 30 percent. He believed he could safely do that by increasing lending to marginal customers, especially Hispanics. ... In 2003, Mozilo, citing Bush’s push for minority home ownership, pledged to a Harvard audience that Countrywide would lend $600 billion to minority and lower-income borrowers by 2010. In 2005, he boosted that promise to one trillion dollars. ... Countrywide went under in 2008. ... > For example, a 2015 paper by Lin, Liu, and Xie found that in a sample of 18,000 households: The difference in the mortgage delinquency rates between immigrants (15.7%) and natives (4.4%) is significant. > Similarly, a 2013 paper by Luea, Reichenberger, and Turner revealed 2009 default rates for whites of 3.4 percent, blacks 11.3 percent (3.3 times the white rate), and Hispanics 16 percent (4.7 times the white rate) > A 2013 paper by Reid featuring data from the fifty largest metro areas for mortgages originated just in 2005 shows that foreclosure rates by 2009 were twice as bad for blacks as whites and almost three times as bad for Hispanics as whites. By 2010, 10.5 percent of Hispanics were in foreclosure versus 4 percent of whites. > According to Zillow, Hispanic neighborhoods nationally exploded in price by 280 percent from 2000 to 2006 versus about 160 percent for white neighborhoods. Remarkably, by the peak of the Bubble, the median home in a Hispanic neighborhood was worth almost a hundred thousand dollars more than the median home in a white neighborhood. Not surprisingly, the decline in home value from peak to trough was almost twice as severe in Hispanic neighborhoods as in white neighborhoods. > In summary, immigration was seen as a vast boon to the housing market until it turned out that Hispanics tended not to be able to afford the huge mortgages they had been given. At that point in 2008, housing prices in several high-priced Hispanic-heavy states, such as California and Florida, plummeted, taking down financial institutions like Lehman Brothers, Washington Mutual, and Countrywide Financial. This carnage set off a national recession even in places without a Housing Bubble. > Santayana famously said, “Those who cannot remember the past are condemned to repeat it.” But what if you haven’t forgotten it because you never had a clue in the first place?
- camgunz 4y ago
  This stuff is basically all true, and I'll add that it started in the Clinton years. Dems wanted to open up homeownership to minorities, Republicans wanted more mortgages, it was a pretty perfect policy, then they forgot to regulate the mortgage industry. The documents that came out of banks revealing predatory lending tactics are... basically evil.

logicalmonster 4y ago

Different media outlets have publicized this story by claiming that this program was just for Black and Latino buyers (pretty racist for a company to sell different products and have different policies for people based on race), while this story says that this program is in historically Black and Latino neighborhoods. Kind of a difference if it's open to all people or not. Which is it? Personally, I'd say that the ''bankers'' are using the guise of ''helping the people of color'' to actually prey on them. This is a slam dunk setup for another government bailout (''Help us Uncle Sam, so many people defaulted on their loans, nobody could see this coming.'') as well as taking control of lots of property during the next economic downturn.

joemazerino 4y ago
Precisely! Also helps to tap into government subsidies by helping minorities. Both racist and predatory.
cercatrova 4y ago
The US government made money from the 2008 bailout. I don't understand why people think it was free money to the banks. No, they were loans that were fully paid back with interest.
- ericns 4y ago
  - cercatrova 4y ago
    Nowhere in this article is there a relation to bank bailouts. And I don't need your snide quips either.
    - logicalmonster 4y ago
      > Nowhere in this article is there a relation to bank bailouts. Of course there is (when you remember the 2008 housing crash and think a step or two ahead) During good times, putting lots of poor-ish people into homes they can just barely afford is a feel-good story. During bad times, when people get laid off and many of these people can likely no longer afford their home, it creates a shit-storm of epic proportions that negatively affects everybody.

throwaway_4ever 4y ago

It seems to me a huge bank like Bank of America is well-capitalized to start a huge investment project into a troubled area of a city that will: 1. provide wealth to it's residents 2. fix crime and blight 3. help alleviate housing affordability crisis Right now, a troubled area might have housing wealth be 1/4 of a nearby affluent area. But generally, this is simply because of crime and bad schools due to the cycle of poverty. If you're able to quickly alleviate the crime and poverty, suddenly that troubled area is basically as desirable for housing as the rest of the area. Now, usually, this "gentrification" process has happened slower, over decades, and without the corresponding wealth accrual of its current residents. So it doesn't work out for the current residents and the clash between people is much harsher. But what if all the wealth that was created when a $300k East Oakland home becomes $1m, was equally shared between investment and residents? Could you pay people (give them some type of community job) and/or make sure everyone has housing equity, to break that cycle, stop the crime, so that everyone wins? It feels doable if tackled on a large scale, what am I missing?

IshKebab 4y ago
You're missing the fact that gentrification is caused by the movement of people, and that always takes a very long time. Crime goes down in gentrified areas because the criminals can't afford to live there anymore.
tarakat 4y ago
> But generally, this is simply because of crime and bad schools due to the cycle of poverty. What makes the schools bad, if they receive on-average marginally higher per-pupil funding than mostly-white schools [1]? [1] on average, both Black and Latinx total per pupil expenditures exceed White total per pupil expenditures by $229.53 and $126.15 - https://journals.sagepub.com/doi/full/10.1177/2332858419872445 https://journals.sagepub.com/doi/full/10.1177/23328584198724... - I can't find a source now, but the average per-pupil funding is around $20,000, so a difference of $200 is negligible. If you're surprised that the funding is almost the same, despite schools being funded by property taxes, which are much higher in whiter neighborhoods, that's because you were hoodwinked by the media. Schools are funded by local property taxes and state taxes, with the latter distributed to even-out the funding. For some mysterious reason, the latter funding source receives much less coverage than the former.

dkobia 4y ago

As always a token of good faith from bankers only makes sense when viewed through the lens of Gordon Gekko - “It’s all about bucks, kid. The rest is conversation.”

camgunz 4y ago

Quick reminder to everyone in the thread that this isn't an example of reverse racism, which doesn't exist, nor is it an example of racism, which would require that BofA consider Black and Latino mortgage seekers as superior to Whites based on their race. Not to be all Eeyore, but it's a little exhausting to have any post about any race-conscious action get bogged down by commenters who haven't even read the Wikipedia pages for racism and reverse racism. There's an interesting discussion to be had about these kinds of policies: - housing as infinitely growing store of wealth is probably bad, is it a good idea to get more people on that train? Is it unfair to effectively bar Black and Latino mortgage seekers from the gravy train? - is it a good idea to do this now, as we're descending further into a housing crisis, or are these markets more liquid than others - what are other non-credit-score measures of creditworthiness? Is credit even a good idea? Should the government just back things like mortgages, school, and auto loans? https://en.m.wikipedia.org/wiki/Racism https://en.m.wikipedia.org/wiki/Racism https://en.m.wikipedia.org/wiki/Reverse_racism https://en.m.wikipedia.org/wiki/Reverse_racism