Bank of America is expanding a program that provides 3% down payment home loans through a partnership with Freddie Mac and a North Carolina credit union.
The Charlotte, N.C.-based bank said Thursday it would double its commitment to the Affordable Loan Solution mortgage program to $1 billion from $500 million. The program,
The program stemmed from a partnership Bank of America formed with Freddie Mac and Self-Help Ventures Fund, a nonprofit loan fund run by Self-Help Federal Credit Union in Durham, N.C. Loans are originated by Bank of America loan officers and then sold along with their servicing rights to Self-Help.
Servicing is handled by Self-Help's specialty servicer. Freddie Mac defines the credit terms and approved Self-Help as a seller/servicer to facilitate the program. The government-sponsored enterprise also purchases all eligible mortgages originated through the program.
Loans through the program can have down payments as low as 3% for the purchase of a single-family primary residence. Loan amounts for the program are limited to current conforming loan limits of $417,000. To make the loans more affordable, borrowers are not required to purchase mortgage insurance because Self-Help takes the first-loss position on the mortgages.
