Shame on you, Bank of America
Bank of America’s decision to pull out of a highly successful revolving loan program that helps first-time homebuyers finance properties in our community is outrageous, particularly given the behemoth bank’s exceptionally bad behavior during the mortgage crisis of the last decade. Bank of America likes to cast itself as a good corporate citizen, but in abandoning the ONE Mortgage program – pioneered right here in Dorchester – the corporation has shown itself to be a poor sport and, even worse, a sneaky, predatory lender.
The Massachusetts Affordable Housing Alliance (MAHA) broke the news of the bank’s ill-advised withdrawal from the program on Tuesday, even though the bank actually pulled out in January. The decision comes after 22 years of participation in the soft-second-loan program, the precursor to the existing ONE program. During that time Bank of America, or the banks it acquired over those years, closed on 7,039 of the 17,380 loans administered through the MAHA-led process. About half of the loans originated since 2004, the year Bank of America entered the Boston market, according to an analysis released by MAHA on Tuesday. Their numbers show that the banks’ affordable-loan production peaked in 2009 at 1,027 and has been on the decline ever since.
Bank of America closed on just 68 ONE program loans last year, despite Gov. Deval Patrick’s challenge for banks to step up their numbers to offset the widespread damages of the previous years. In fact, the bank refused to join last year’s compact with other lenders – organized by the Patrick administration – and has instead been marketing a more expensive loan product to their consumers. It has also pulled out of the Mass Community Banking Program— a council of bankers and advocates that seeks to redress the ills of redlining and predatory lending.
Their plan, as MAHA indicates in its analysis, seems to be to “gouge our lowest income homebuyers” by charging them hundreds of dollars more per month with their own mortgage product and not offering them a cheaper alternative through the ONE system.
The good news: Other large banks haven’t flinched from their commitment. In fact, some — like Citizens and Santander are stepping up their levels of activity. But Bank of America’s abandonment of a successful program portends trouble ahead in our communities – especially if it retains its market share by preying on unsuspecting new buyers. The cost locally, according to MAHA’s calculations, will amount to more than $1.25 million in higher payments to Bank of America this year alone. That’s money that should be staying in the pockets of our neighbors for improvement projects and other spending in our communities.
“Bank of America needs to do more to assist low- and moderate income first-time homebuyers,” said Esther Maycock-Thorne, MAHA’s president. “They’re in our communities and in our neighborhoods. Why aren’t they offering this product? I really don’t get why the largest bank in the state isn’t offering the most affordable mortgage program.”
It’s a good question and one that Bank of America can’t answer with a straight face. Until its leaders come to their senses, the city of Boston should take steps to penalize the bank for their poor decision-making. The next time this deep-pocketed banking corporation offers the city a penny-ante donation, we hope that Mayor Walsh and his administration will say, “Thanks, but no thanks. We’d rather partner with lenders who aren’t trying to put the squeeze on the poorer people of Boston.”