April 16, 1999

San Francisco - Bank of America, the nation's largest mortgage servicer, announced today a major expansion of its affordable housing efforts. As a result of the merger between BankAmerica Corporation and NationsBank, the Neighborhood Advantage Zero Down mortgage will now be available in 34 states and in the District of Columbia, and the Neighborhood Advantage Credit Flex mortgage product will be available in 35 states and the District of Columbia.

"Homeownership is a fundamental part of the American Dream," said Andy Woodward, president of the bank's mortgage group. "We are committed to insuring that all segments of the community have access. Zero Down and Credit Flex are two ways we can offer flexibility to the needs of low-income and first-time homebuyers."

How the Products Work

Zero Down and Credit Flex were developed to address specific needs faced by low-income and first-time home-buyers in the marketplace. The Neighborhood Advantage Zero Down program is designed to help many low-income people who have a good credit history, yet have not had the opportunity to save money for a downpayment on a home. The 30-year, fixed-rate home loan is also available to borrowers of any income who are buying or refinancing a home in a low-income neighborhood. In addition to the zero downpayment feature, closing costs for this mortgage can come from a gift, grant, installment loan or the seller.

The Neighborhood Advantage Zero Down mortgage requires significantly less out-of-pocket cash to complete a home purchase than is required with a traditional three-percent-down mortgage or a Federal Housing Administration (FHA) mortgage. For a $100,000 home purchase price, for example, consumers using a Neighborhood Advantage Zero Down loan would need approximately $2,028 to complete their transaction — less than half the amount they would need with either a traditional three percent down-payment mortgage or a comparable FHA loan. All three loans require closing costs, but only Neighborhood Advantage Zero Down requires no down-payment on the purchase price of the home.

Bank of America designed the Credit Flex mortgage (working with PMI Mortgage Insurance Co.) for low-income families who pay their bills on time, but haven't established a credit score, which has become an increasingly integral part of the process when applying for a home loan.

Credit Flex allows Bank of America's mortgage loan officers to assess a potential homebuyer's qualifications outside the traditional credit scoring process. For example, since no minimum credit score is required, borrowers without a credit history may simply document that they have paid their rent on time for a period of 12 months.

Also, to accommodate the needs of many low-income customers, Credit Flex allows a portion of their income earned through part-time or casual employment to be considered in the application process.

The Credit Flex product is a 30-year, fixed-rate mortgage that enables borrowers to obtain a loan with limited funds from their own pockets. Only a three percent downpayment is required, with only one percent from the borrower's own funds. In all states where Credit Flex is available, the other two percent can come from a gift, grant or other loan. Additional product flexibilities include allowing up to 45 percent of the borrower's income to be used to cover housing costs rather than the 38 percent commonly used in other affordable lending products.

The maximum loan amount allowed under both mortgage programs is equal to the single-family conforming loan limit of $240,000 with a mortgage limit in Hawaii of $300,000 for Zero Down mortgages and $360,000 for Credit Flex mortgages.

To be eligible for these Neighborhood Advantage mortgage programs, a borrower must have an annual income not exceeding 80 percent of median income for the Metropolitan Statistical Area where the home is located. (There is no income limit for borrowers purchasing or refinancing homes located in low-income census tracts). In San Diego the median income is $42,000.

The Zero Down and Credit Flex mortgages are part of Bank of America's $350 billion, 10-year commitment to community development lending and investment, which is by far the largest and most comprehensive program ever for community development lending by a United States bank. $115 billion of this commitment has been designated for affordable housing. This includes single- and multi-family lending and investments to low-and moderate-income borrowers, low-and moderate-income neighborhoods and minority applicants.

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