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I read a lot of articles on the real estate and note industry. When you do it often enough you start to notice trends within the industry. One such trend I am seeing is the fear of another real estate bubble in certain parts of the country.

Perhaps the leading cause of the last real estate bubble was lending money to borrowers with lower credit scores and small down payments.

Well, guess what? These loans are growing once again. See this article snippet:

Bank of America is expanding its “Affordable Loan Solution” mortgage product, introduced back in February in partnership with Freddie Mac and Self-Help Ventures Fund. The bank announced this week that it is doubling its annual commitment from $500 million to $1 billion.

The program allows down payments as low as 3 percent on the purchase of a primary, single-family residence, with no reserve funds required in most situations. Borrowers must have a FICO score of 660 in order to qualify and non-traditional forms of credit are accepted. However, first-time buyers must participate in homebuyer education through a HUD-approved housing counseling agency. 

D. Steve Boland, consumer lending executive at BofA, said, “We’re especially proud of how the Affordable Loan Solution program has become a popular choice for creditworthy first-time homebuyers, many of whom live in underserved communities.”

BofA was among the first of several banks to offer proprietary low down payment programs this year. Wells Fargo and JPMorgan Chase also rolled out programs this year.

These are NOT the only loan programs offering low down and lower credit scores. Something to keep an eye on!

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