2008 all over again, BOA launched 0 down, 0 closing, etc.

[QuarterMillionMan]

2008 all over again? BofA just launched a test of zero-down-payment, zero-closing cost mortgages for minority communities (yahoo.com)

Did we not learn from 2008. Actually, I wish more banks would follow suit. Which might lead to another crash. Then I might be able to start my search again for a short sale or foreclosure.

[disneysteve]

Nobody ever learns. They make the same mistakes over and over. It’s all cyclical.

[ua_guy]

They didn't mention interest rates. I bet these are higher than average.

From the article, it sounds like a pilot program deployed in just a few cities. I like the tagline of making home ownership more accessible to minorities who are facing a really steep barrier to entry. And isn't it a fact that credit scores don't always reflect someone diligently paying rent for many years? That should absolutely be considered on a mortgage application / loan determination.

BoA must be expecting the housing market to hold water for some time. However, we are talking about BoA. I don't believe for a minute this is totally benign. They're seeing opportunity in something, but what is it?

[kork13]

Doesn't it seem a bit exploitative to peddle this type of high-risk/low security mortgage specifically toward minority communities? Especially in an inflated RE market that's starting to cool?

That said, at least they're doing some things decently that could actually be helpful:
- Borrowers under the program requires them to go through an education class covering home ownership.
- They're accepting applicants without established credit history, instead relying upon consistent rent & utility payments.
- They're also not requiring PMI ...... though I'd bet dollars to donuts that they're also building in extra costs (to manage their default risks) via higher interest rates.

[LivingAlmostLarge]

This is what will finish the bubble cycle on housing crazy loans. Right now it's not out of control and it's been a lot of loopholes to get a mortgage. But soon that's how we will keep inflating the price.

[disneysteve]

Doesn't it seem a bit exploitative to peddle this type of high-risk/low security mortgage specifically toward minority communities?

Totally predatory lending at it's "finest". Get a bunch of vulnerable folks into homes they can't really afford. Then BOA sells off the loans so they make their money and move on. The market cools and all of those people with zero equity find themselves upside down on their loans trapped in houses they can't afford to continue to live in and with no way out.

[QuarterMillionMan]

That makes sense disneysteve.

[LivingAlmostLarge]

Totally predatory lending at it's "finest". Get a bunch of vulnerable folks into homes they can't really afford. Then BOA sells off the loans so they make their money and move on. The market cools and all of those people with zero equity find themselves upside down on their loans trapped in houses they can't afford to continue to live in and with no way out.

And then we bail out banks instead of student loan borrowers. But the banks should be on the hook for crazy mortgages and crazy student loans.