Bank of America has announced a program that will let homeowners facing foreclosures stay in their homes as renters.
The “Mortgage to Lease” program will start as a limited pilot program for up to 1,000 homeowners in Arizona, Nevada and New York selected by the bank.
The bank said if the effort succeeds, it could be expanded to the broader group of at-risk homeowners with BofA mortgages. Homeowners can not apply to be part of the program at this time.
Those selected for this initial pilot program will be more than 60 days delinquent on their home loans, have high loan balances in relation to their current property value, have no other liens on their property, and have an income level high enough to afford the rent.
The homeowner will transfer title to their properties to the bank and have their outstanding mortgage debt forgiven. In exchange, they may lease their home for up to three years at or below the current market rental rate.
While Bank of America will retain ownership of the properties at first, homes in the pilot program will be transitioned to investor ownership. The bank will work with property management companies to oversee the rental properties.
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One Response
So the person who lost the house gives up their claim to the house, which is worthless. The bank gives up any claim they had on the mortgage, which is worthless. The bank saves the money that foreclosure would cost, and the money that finding a new tenant would cost. And when the price goes up, perhaps even high enough that the mortgage would not have been under water, the bank sells the house for a nice profit.
Sounds look a good deal for the bank. No altruism involved.
For the tenant, they might be better off by stalling foreclosure in order to get more “free rent.”