Magazine article American Banker

NationsBank Offers No-Down-Payment, No-Closing-Cost Loan

Magazine article American Banker

NationsBank Offers No-Down-Payment, No-Closing-Cost Loan

Article excerpt

NationsBank Corp. unveiled a no-down-payment, no closing-cost mortgage program Monday that bankers and activists said could become the new standard for community reinvestment.

The five-year, $500 million program will focus on low-income borrowers, who will receive pre-purchase and post-purchase credit counseling from the Neighborhood Assistance Corporation of America.

"It is a very, very important arrow in our quiver," said Catherine Bessant, a senior vice president at NationsBank. "We are genuinely, to the core, fired up by it. This extends the market of people we can reach."

The announcement comes just three months after a civil rights group sued NationsBank for discriminating against minority loan applicants in the Washington, D.C., area. The bank has vowed to fight the charges.

NationsBank's commitment dwarfs similar programs offered by other banks in both size and scope, said Bruce Marks, executive director of the Boston based neighborhood assistance group.

"This is the biggest deal in banking history when it comes to community reinvestment," Mr. Marks said. "There will be over 10,000 new homeowners who will stabilize communities across the country."

Mr. Marks said his group has operated a smaller program with several Boston-area banks since 1988, putting together 1,000 loans without a single foreclosure or default.

The program - scheduled to start in Washington, D.C.; Baltimore, Atlanta, and NationsBank's hometown of Charlotte, N.C. - will allow borrowers to receive a no-closing-cost, no-down-payment mortgage at 38 to 50 basis points above the retail rate. …

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