BBVA Compass will now allow borrowers to finance up to 100 percent of a home’s value, while also contributing $4,500 to closing costs as a part of their new Home Ownership Made Easier program. The program is part of the Alabama-based bank’s recent pledge to put $11 billion in lending and services to support low income and moderate income individuals.
"We've built a comprehensive program that will help many people across our footprint realize the dream of homeownership, something that may have seemed unattainable to them in the past," said Eduardo Castaneda, executive director of real estate lending for BBVA Compass. "The financing and closing cost assistance, and the essential homebuyer education, will help ensure they enjoy the benefits of their new home for years to come."
In December of last year, Fannie Mae and Freddie Mac released a mortgage program allowing borrowers to put a down payment of a little as 3 percent. The program was set to target individuals with good credit, but low cash flow. This program has drawn much controversy, with some saying this kind of risky lending is what caused the financial crisis.
"The idea that you can get a mortgage with just 3 percent down is something that can get us back into bubble territory," Russell Goldsmith, chairman of City National Corp. in Los Angeles, said in an interview with the LA Times.
BBVA’s program goes one step further by getting borrowers into a home with a down payment as little as $500. HOME also offers individuals to use seller funds and cash gifts to pay remaining closing costs and other expenses such as taxes and insurance that must be paid at closing before they are technically due. Flexible fixed-rate mortgage terms are offered through the program and no private mortgage insurance is required.
"In some cases, clients participating in the bank's HOME program will pay a monthly mortgage payment that is less than what they currently pay as renters," Castaneda said. "And that's an important point: This program will be helping people who've already proven their ability to make that monthly payment."