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

BANK OF AMERICA (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

(Reuters) - 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.

(Reuters) - 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)

Stocks mentioned in the article
ChangeLast1st jan.
FEDERAL HOME LOAN MORTGAGE CORP --End-of-day quote.
FEDERAL NATIONAL MORTGAGE ASSOCIATION -2.58% 1.51 Delayed Quote.-41.51%
WELLS FARGO 0.10% 52.61 Delayed Quote.-13.29%
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Financials ($)
Sales 2018 92 980 M
EBIT 2018 38 201 M
Net income 2018 26 353 M
Debt 2018 -
Yield 2018 1,96%
P/E ratio 2018 11,80
P/E ratio 2019 10,55
Capi. / Sales 2018 3,33x
Capi. / Sales 2019 3,18x
Capitalization 310 B
Chart BANK OF AMERICA
Duration : Period :
Bank of America Technical Analysis Chart | BAC | US0605051046 | 4-Traders
Technical analysis trends BANK OF AMERICA
Short TermMid-TermLong Term
TrendsBearishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 31
Average target price 34,3 $
Spread / Average Target 13%
EPS Revisions
Managers
NameTitle
Brian T. Moynihan Chairman, President & Chief Executive Officer
Catherine P. Bessant Co-COO & Chief Technology Officer
Thomas Kell Montag Co-Chief Operating Officer
Paul M. Donofrio Chief Financial Officer
Thomas J. May Independent Director
Sector and Competitors
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