Following the recent introduction by Bank of America of a new special purpose credit program aimed at increasing minority homeownership, a leading Black-owned lender announced the details for its own.
Legacy Home Loans will roll out its SPCP pilot, called Closing the Gap, in six cities: Atlanta, Baltimore, Chicago, Detroit, Memphis, Tennessee, and Philadelphia. The program features free home appraisal, warranty and counseling. Financial assistance for closing costs will also be available.
In contrast to the BofA program, which offered a grant that brought initial down payment to as low as zero, Legacy’s pilot features a 1% option.
The Las Vegas-based company, a subsidiary of Panorama Group, expects its team’s knowledge and understanding of Black consumers to help drive interested home buyers over to its program instead of competing SCPCs.
“Legacy Home Loans is w. you are celebrated, not just tolerated”, said Legacy Home Loans President and CEO Ben Slayton in a press release.
Legacy will use criteria, such as rent and utility payment histories, to determine creditworthiness. Underwriting guidelines are based on borrower income and a credit score of 620 or more. Like Bank of America’s program, eligibility is open to residents of majority-minority neighborhoods. In Legacy’s case, applicants must currently reside in census tracts located within the pilot cities with majority Black populations. But no restrictions are placed on the location of the new home purchase.
Approximately 40% of Black Americans currently own a home, compared to over 70% of the white population, according to the National Association of Realtors. The Closing the Gap initiative was developed and given its name to address the disparity.
Legacy hopes to originate $1 billion worth of mortgages for Black home buyers by the end of 2023, with a goal of maintaining or increasing that production level every year going forward.
The lender’s SPCP announcement follows the introduction earlier this summer of a new online toolkit, a joint collaboration between the Mortgage Bankers Association and National Fair Housing Alliance, intended to assist interested mortgage lenders in the creation of special purpose credit programs. SPCPs were created to open up purchase opportunities for consumers in underserved communities.
Although in existence for decades, special-purpose credit programs received renewed attention this summer after government-sponsored enterprises featured them prominently as part of their equitable housing finance plans. Fannie Mae and Freddie Mac both indicated their intent to increase acquisitions of loans originated through SPCPs.