Bank of America pulls out of Massachusetts affordable mortgage progam
Martin Desmarais | 6/11/2014, 10:47 a.m.
In a move that has frustrated housing officials across Massachusetts, Bank of America has pulled out of the state’s most affordable mortgage lending programs.
The bank will instead offer mortgages to the same customers for as much as $500 more a month — an increase that housing experts say low- and moderate-income homebuyers cannot afford.
For the ONE Mortgage program, which features low, fixed-rate financing and state-backed loans that relieve first-time homebuyers from the cost of private mortgage insurance, the loss is even greater. The Massachusetts Housing Partnership program — and its predecessor — average 800 to 1,000 loans a year for a total of approximately $275 million, of which Bank of America has averaged 300 loans a year for about $75 million, according to Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance.
Bank of America has — and the banks it has acquired in a number of mergers have — been responsible for over 40 percent of the loans offered in the affordable mortgage lending programs the state has run, dating back over two decades.
“This is taking more than 300 loans out of the market,” said Esther Maycock-Thorne, president of the Massachusetts Affordable Housing Alliance. “We do not understand why the largest bank in the state is not offering the most affordable and sustainable program for low- and moderate- income first time homebuyers.
“It is just not acceptable at this time,” she added.
Bank of America is mostly mum on the move, saying only the decision to not take part in the ONE Mortgage program reflects corporate policy.
“As previously reported, offering one-off products on a state-by-state basis doesn’t align with our efforts to simplify the company,” a Bank of America spokesperson said in a statement. “We’re above the industry average for lending to low- and moderate-income borrowers in the Boston area, and we certainly expect that trend to continue. Bottom line, we remain committed to helping all qualified borrowers purchase homes.”
But Maycock-Thorne is not satisfied with that answer.
“They come into our neighborhoods and they service consumers in more than one way — savings, credit, student loans,” said Maycock-Thorne. “For them to then turn around and say that one size fits all and they are not catering to one particular community or one particular state makes no sense. How can they say that?”
She also points out that Bank of America, which is one of the most prominently featured bank branches through Boston’s neighborhoods, does upwards of $50 billion in deposits in these branches.
“It is Bank of America’s responsibility to give back to the communities they are in — that they are taking from,” she added.
Callahan likened Bank of America’s plans for offering mortgages to predatory lending practices that first triggered the foreclosure crisis that shook the nation in the last decade. He said that the bank is marketing the more expensive Federal Housing Administration loans to homebuyers who are eligible for the ONE Mortgage program.
The Massachusetts Affordable Housing Alliance and the Homeownership Action Network recently released a report detailing the impact of Bank of America’s defection from the state lending program.