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Th e M Rep o RT | 35 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ORIGINATION the latest ORIGINATION Bank releases new Zero-Percent- down mortgage Program With BBVA Compass' home ownership Made easier program, homebuyers can purchase a home with as little as $500 down, and some may pay less monthly than their current rent. B BVA Compass now allows borrowers to finance up to 100 percent of a home's value, while also contributing $4,500 to closing costs as a part of its new Home Ownership Made Easier (HOME) program. The program is part of the Alabama-based bank's recent pledge to put $11 billion in lending and services to support low-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, execu- tive director of real estate lending for BBVA Compass. "The financ- ing and closing cost assistance, and the essential homebuyer edu- cation, 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 al- lowing borrowers to put a down payment of as little as 3 percent. The program was set to target individuals with good credit but low cash flow. This program drew much controversy, with some saying this is the kind of risky lending that 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 allows 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 mort- gage insurance is required. "In some cases, clients par- ticipating 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." at Merrill Lynch," Bernanke said at a Federal Open Market Committee meeting, according to the transcript. "But there were enormous losses at Merrill Lynch that emerged very quickly and that surprised Bank of America and us as well." At the January 2009 meeting, Bernanke said Bank of America's initial deal to buy Merrill was a "freely negotiated agreement" between the two banks. "There was no government assistance, and there was no re- quest for government assistance," he said. "It was a commercial decision. At that time, we were actually quite happy to see it happen because we were con- cerned about the pressures on Merrill. But it was their decision, and we had no particular reason to think that there would be extraordinary losses in this case." The bailout for Bank of America also included an agree- ment to protect the bank from losses on a pool of bad loans and securities, modeled after a similar arrangement for Citigroup. Bank of America had already received $25 billion from the government as part of a 2008 Treasury plan before receiving the $20 million in 2009. "I know President Lacker was uncomfortable with this arrangement," Bernanke said. "I am certainly very uncomfortable with it. But for whatever reason, our system is not working the way it should in order to address the crisis in a quick and timely way. Until the reinforcements ar- rive, I don't think we have much choice but to try to work with other parts of the government to prevent a financial meltdown." Bank of America paid back all of its bailout money by the end of 2009 and canceled the loss- protection agreement, which was never finalized. Bank of America CEO Ken Lewis retired at the end of the year and was replaced by Brian Moynihan, who took steps to sell off assets and simplify the bank. In September 2012, Bank of America agreed to pay $2.43 billion to settle claims it misled investors about the Merrill Lynch deal.

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