Bank of America announced Thursday that it will pilot a program to turn distressed homeowners into renters in a few of the hardest-hit mortgage markets.
The mortgage-to-lease program would keep people in their homes and avoid foreclosure, while allowing the bank to forego the costly foreclosure process and keep a revenue stream coming in while homes are hard to sell.
“This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support," said Ron Sturzenegger, who runs Bank of America's division that is handling troubled mortgages, in a statement. "This program may have the potential to further round out the broad set of solutions we offer our customers in need of assistance.”
Fewer than 1,000 people in Nevada, Arizona and New York will be asked to participate in the invitation-only pilot. They must be delinquent on their loans at least 60 days, have already gone through other foreclosure prevention options, and have enough revenue to cover a rent payment.
Bank of America will assume ownership of the home, and the homeowner's debt will be extinguished. The rent payment will be less than the mortgage payment was, and renters can stay in the home for up to three years. Property management companies will oversee the rental properties.
If the pilot succeeds, the Charlotte bank will explore broadening it.
Bank of America confirmed to the Observer last month that it was exploring such a program. Mortgage industry analysts said the plan was ambitious and doubted that such a program could expand nationwide.
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4 comments:
Anything to make average Americans debt slaves to the banks.
A & K - you never answered my questions about whether you (a) read; and (b) understand, the ZeroHedge site.
No, they don't want to be a landlord, they are just easing the paperwork for the inevitable. The rent option is being given to people whose likelihood of foreclosure is right around 100%. BofA gets the note with one signature, and 3 to 6 months later, they have their house back from someone who can't afford to live there. Done. It will save a ton of time and money because 90% of the nonpayers "hold on" for a year or two while in court, trying to get a "hamp" holdout, a modification "bailout"...etc. And for that year or two of paperwork...THEY MAKE NO MORTGAGE PAYMENTS!
The "big blue" bank foreclosed on a family on my street after the man lost his job and they must have missed payments. They let the house sit empty for a YEAR, let the grass get tall, it was vandalized, and then put it on the market for 1/2 the tax value. It's a small community of about 40 homes so after this, everyone's home lost 50% of it's value during the tax evaluation. I prefer the family having stayed in the house and the bank eat the loss instead of the whole neighborhood. I know the family had to pay rent wherever they moved to. Why not accept what they could pay until he found work and then roll it onto the back of the mortgage term?
cltindepenent - because they are evil money launderers. They probably did not even own the note. wake up, America, the banks are not your friend.
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