Bank of America Introduces Teacher Flex Home Loans; New Mortgage Helps Make Homeownership Affordable for California Teachers

Business Wire, April 12, 2000

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--April 12, 2000

Bank of America is helping teachers in California become homeowners with a new flexible mortgage product called Teacher Flex(TM).

Teacher Flex is designed to help both public and private school teachers and administrators overcome the high cost of buying a home in the Golden State. It also responds to the critical need for teachers in California, where the difficulty of affording a home can be a barrier to recruitment.

"Improving the quality of education is a top priority for Bank of America because of the huge effect it has on a child's ability to succeed in life," said Stephanie Smith, the bank's national manager for community mortgage lending. "By helping to bridge the affordability gap, Teacher Flex can make it possible for teachers to stay in California or to move to the state."

With half of California's teachers scheduled to retire over the next five years, at the same time that state education policy mandates a significant reduction in class size, the need for new teachers is acute. Yet teacher salaries are not competitive with salaries paid in other fields requiring the same level of education and training. Non-salary incentives such as Teacher Flex are viewed by political and educational leaders as ways to improve the state's competitiveness.

"The need for quality teachers throughout the state has never been greater," California Governor Gray Davis said. "I commend Bank of America for building on my proposal, which provides $50 million in forgivable loans to qualified teachers. Combined, these programs will not only benefit teachers, but ensure that California's students have quality education."

Teacher Flex offers a 30-year fixed-rate mortgage with a three percent down payment, of which only $500 needs to come from the borrower's own funds. The balance of the down payment can come from gifts or other loans. Teacher Flex also offers flexible underwriting guidelines, borrowers' qualifications to be assessed outside the traditional credit scoring process. For example, borrowers without a credit history can qualify by documenting that they have paid their rent on time for a period of twelve months. Income earned through part-time or casual employment can also be used to qualify potential homebuyers for a loan.

There are no income or geographic limits or teacher experience levels to satisfy. The only requirement is that the borrower be a California-based public or private school teacher or administrator. The maximum loan amount is $350,000.

Bank of America said it has committed $100 million in capital to the program. Freddie Mac has agreed to purchase the loans along with an additional $100 million of other loans to teachers made through special programs by the California State Teachers Retirement System (CalSTRS) and other lenders. The California Treasurer's office, a partner along with Bank of America and Freddie Mac in the $200 million Teacher Mortgage Program, will invest up to $100 million in Freddie Mac securities backed by the Teacher Flex and CalSTRS products.

"This is but one example of ways we can invest to meet a `double bottom line,' achieving good returns and simultaneously strengthening the fabric of our society," California State Treasurer Phillip Angelides said.

Bank of America, with $633 billion in assets, is the largest bank in the United States and the nation's second-largest mortgage servicer with nearly 2.9 million customers and a servicing portfolio of $295 billion. Originating and purchasing loans nationwide, Bank of America helped more than 450,000 families finance their homes in 1999.

www.bankofamerica.com