Bank of America

**jonboy79** · 09-04-2022, 02:02 PM

https://www.cbsnews.com/amp/news/ban...-mortgage/#app

So this story has changed since it came out from explicitly Grecian and certainly illegal to now questionable….

Besides the fact that the government better let Bank of America fail with no bailouts when this clearly doesn’t work, does anyone have any thoughts?

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**blah3** · 09-04-2022, 02:05 PM

Its like they learned nothing from the last housing bubble

**FloridaBasedFan** · 09-04-2022, 06:44 PM

Originally Posted by blah3

Its like they learned nothing from the last housing bubble

They, like the airline industry, the rest of the financial sector, and the auto industry to name a few have learned they are "to big to fail". If this move makes them money they will pass it on the their stockholders, if not, we, the taxpayers, will be there to bail them out. Its how our free marketr system seems to work.

**Culex** · 09-04-2022, 06:55 PM

Originally Posted by blah3

Its like they learned nothing from the last housing bubble

Offering zero down won't do anything so long as people aren't paying for more than they are approved for. This is basically a VA Loan which still comes with pre approval rates.

**jonboy79** · 09-04-2022, 07:29 PM

Originally Posted by Culex

Offering zero down won't do anything so long as people aren't paying for more than they are approved for. This is basically a VA Loan which still comes with pre approval rates.

VA loans still have closing costs and credit requirements.

Zero down, no CC no credit is setting people up to fail.

Last summer I paid $21k down to do a 97% loan on a sub $200k property. Escrow and CC can be a bitch: This was with a mid 700’s credit score:

I now have skin in the game, lots of it.

These people will have none and will be homeless in under a year.

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**Culex** · 09-04-2022, 07:46 PM

Originally Posted by jonboy79

VA loans still have closing costs and credit requirements.

Zero down, no CC no credit is setting people up to fail.

Last summer I paid $21k down to do a 97% loan on a sub $200k property. Escrow and CC can be a bitch: This was with a mid 700’s credit score:

I now have skin in the game, lots of it.

These people will have none and will be homeless in under a year.

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Whos paying closing cost under this program is my question? Is the bank covering it or are they just rolling it into the mortgage? The latter would be a big problem for sure, especially if it bypasses what they were originally approved for. The article states that creditworthiness will be based on timely payments, im guessing this is geared only towards first time buyers that have yet to build credit which is also risky. I get it though, they're trying to help people. I don't think there will be enough to constitute a buyout in this case if people can't afford their mortgage. They'll just be screwed and probably end up homeless when the bank starts taking away assets. The previous real estate bubble occurred when everyone and their mothers couldn't afford their mortgage.

**jonboy79** · 09-04-2022, 08:25 PM

Originally Posted by Culex

Whos paying closing cost under this program is my question? Is the bank covering it or are they just rolling it into the mortgage? The latter would be a big problem for sure, especially if it bypasses what they were originally approved for. The article states that creditworthiness will be based on timely payments, im guessing this is geared only towards first time buyers that have yet to build credit which is also risky. I get it though, they're trying to help people. I don't think there will be enough to constitute a buyout in this case if people can't afford their mortgage. They'll just be screwed and probably end up homeless when the bank starts taking away assets. The previous real estate bubble occurred when everyone and their mothers couldn't afford their mortgage.

Either would be a problem, but my “guess” would be that the lender is selling a higher rate and basically paying “negative points” to cover the costs.
I’d you go back to the 80’s, it was common for buyers to “pay points” to buy the rate down. 1% of the loan balance would buy the rate down a quarter percent and save 10’s of thousands over 30 years. Now, this process is more commonly done in reverse where the lender will add a half percentage in rate to pay 2% towards closing: The buyer pays it back 10 fold if they keep the loan to term.

If a lender, in this market; allows properties to be bought at top of the market pricing with higher than normal rates with no skin in the game from the buyer, people will get underwater fast, defer necessary maintenance, foreclose and steal the appliances. BoA will be sitting on all these foreclosed properties in bad neighborhoods, people will break in and squat and ruin the places..,

This is a total recipe for disaster:

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**Culex** · 09-04-2022, 09:14 PM

Originally Posted by jonboy79

Either would be a problem, but my “guess” would be that the lender is selling a higher rate and basically paying “negative points” to cover the costs.
I’d you go back to the 80’s, it was common for buyers to “pay points” to buy the rate down. 1% of the loan balance would buy the rate down a quarter percent and save 10’s of thousands over 30 years. Now, this process is more commonly done in reverse where the lender will add a half percentage in rate to pay 2% towards closing: The buyer pays it back 10 fold if they keep the loan to term.

If a lender, in this market; allows properties to be bought at top of the market pricing with higher than normal rates with no skin in the game from the buyer, people will get underwater fast, defer necessary maintenance, foreclose and steal the appliances. BoA will be sitting on all these foreclosed properties in bad neighborhoods, people will break in and squat and ruin the places..,

This is a total recipe for disaster:

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Damn I don't know who the hell would agree to that unless they were clueless about it. If that's what BOA is trying to do in order to get higher interest on the back end, that's a helluva scam.

**blueridgemtnman** · 09-05-2022, 11:45 AM

This is a bit different, but related. Both HUD and the USDA have and have pretty much always had programs that offer down payment assistance, low to no interest loans and grants and low to no cost home repairs. You just have to know where to look, etc. This is kicking it up a few notches, but there are plenty of programs out there like it.