First, let me begin with a meme I received this morning:
At first I thought the news headline was fake. So I googled it. Much to my surprise, it is real. I find quotes from the article even more disturbing:
- “Applicants do not have to be Black or Hispanic to qualify for the product, a bank representative said.” So, at first glance, one would say of course, discriminatory lending practices are illegal. But…
- “Bank of America’s Countrywide Financial, a subprime lender it purchased in 2008, was fined $335 million in 2011 over claims that it charged Black and Hispanic homebuyers higher interest rates than white applicants.” And
- “In 2012, Wells Fargo agreed to pay $175 million to settle claims that it targeted people of color with risky home loans that were more expensive.”
So, to say something is fishy here is an understatement. We have a looming recession, inflated asset prices (stocks, bonds, real estate, used cars, you name it), supply chain issues, natural disasters, etc. So this is the perfect environment to ramp up sub-prime lending like the 2008 financial crisis?
Another thought comes to mind: Just who are the sellers of the homes in the neighborhoods BofA is targeting? Remember, if someone is buying a home, then someone (or some business entity) is selling. Is there anyway to trace that ownership to Bank of America and the alleged hedge fund friends of the meme? I will leave that research to the readers. If you find something, post a comment.
2 thoughts on “Bank of America: Zero-down-payment mortgage for first-time buyers”
Fishy timing, indeed. BofA may be looking for ways to stimulate activity as the market slows down.
Tracing homeownership is a tedious task, but the below article may be helpful. Institutional investors own 0.21% of residential real estate.
Whereas, BlackRock and Goldman have well-known funds which invest in this market, nothing has been written of BofA. If by chance they did, directing specific purchases to those properties would be quite a feat. It seems much more likely BofA is seeking to stimulate activity, and perhaps make themselves look good in the process.
We can not take what I say, nbc, or heritage.org as the monopoly on the truth. For instance, heritage.org puts the institutional ownership at 0.21% as you suggest. This is different than the number from multihousingnews.com (HTML), which also defines institutional ownership:
“Institutional ownership—defined as portfolios with more than 2,000 properties—is estimated to account for between 2.1 and 2.5 percent of total SFR units”
Then you have institutions like American Homes For Rent (AMH) and Invitation Homes (INVH) that are publicly traded companies with hundreds of thousands of properties. They were mentioned in the New York Times Article “A $60 Billion Housing Grab by Wall Street “: https://www.nytimes.com/2020/03/04/magazine/wall-street-landlords.html
But wait, there’s more. In another New York Times Article titled “Goldman Sachs Forecloses on 10,000 Homes for ‘Consumer Relief’” (HTML) we have yet another example of institutions getting in the single-family home space. I believe we have only scraped the surface of institutional ownership of single family homes. Are BofA and Wells Fargo also involved? If so, to what extent? Given “everybody else is doing it” (in this reply alone I cited two publicly traded companies that specialize in residential home rental as well as Goldman Sachs foreclosing on homes), I don’t see why not BofA, Wells Fargo, and more.
So I assert, institutions own lots of homes. Is the percentage 0.21%, 2.1%, or higher? I don’t know. I am willing to wager it is far higher than the 0.21% number though…