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4-Traders Homepage  >  Equities  >  Nyse  >  Bank of America Corp    BAC

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BofA opens debate on lowering mortgage down payments

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05/19/2017 | 01:19am CEST
A Bank Of America sign is pictured in the Manhattan borough of New York

The head of Bank of America Corp (>> Bank of America Corp), the United State's fourth-biggest mortgage lender, said on Thursday banks would be able to supply a bigger share of funding for home purchases if the standard down payment for buyers was cut to 10 percent from 20 percent.

The head of Bank of America Corp (>> Bank of America Corp), the United State's fourth-biggest mortgage lender, said on Thursday banks would be able to supply a bigger share of funding for home purchases if the standard down payment for buyers was cut to 10 percent from 20 percent.

The vast majority of mortgages are underwritten to strict standards set by the U.S. government or quasi-government entities Fannie Mae (>> Federal National Mortgage Association) and Freddie Mac (>> Federal Home Loan Mortgage Corp). While down payment requirements can vary, they offer fairly little latitude to lenders that do not want to take all the risk themselves. As a result, many prospective homebuyers who cannot come up with a 20 percent down payment are unable to get a loan.

"Our goal - going back to regulatory reform - is should you move the down payment requirement from 20 percent to 10? It wouldn't introduce that much risk but would actually help a lot of mortgages get done," Chief Executive Officer Brian Moynihan told CNBC in an interview Thursday.

Bank of America was the top U.S. mortgage lender ahead of the 2008 mortgage crisis, causing it to face greater losses, both from defaults and litigation, than any other bank. Under Moynihan, who took the helm at the start of 2010, the bank has tightened lending standards and executives regularly use the motto "responsible growth" in public speeches.

Bank of America has ceded market share partly because, unlike peers Wells Fargo (>> Wells Fargo & Co) and JPMorgan Chase & Co (>> JPMorgan Chase & Co.), it does not acquire mortgages from other lenders.

(Reporting by Dan Freed and David Henry in New York; Editing by Lisa Shumaker)

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Financials ($)
Sales 2017 89 470 M
EBIT 2017 33 981 M
Net income 2017 19 686 M
Debt 2017 -
Yield 2017 1,64%
P/E ratio 2017 12,64
P/E ratio 2018 10,74
Capi. / Sales 2017 2,59x
Capi. / Sales 2018 2,48x
Capitalization 231 382 M
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Number of Analysts 33
Average target price 25,8 $
Spread / Average Target 11%
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NameTitle
Brian T. Moynihan Chairman, President & Chief Executive Officer
Catherine P. Bessant Co-COO & Chief Technology Officer
Tom Montag Co-Chief Operating Officer
Paul M. Donofrio Chief Financial Officer
Thomas J. May Independent Director
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