Bank of America pilot program
Bank of America has announced their “Mortgage to Lease” program in limited pilot for up to 1,000 homeowners in Arizona, New York, and Nevada, wherin homeowners in danger of foreclosure may stay in their homes as renters. Bank of America said in a statement that if the pilot is a success, they will expand the program to a more broad group of homeowners at risk of foreclosure.
Homeowners will not be able to apply for the pilot program, rather the bank will select the participants from at-risk homeowners in the three states that are over 60 days delinquent on their home loans, have income that qualifies for the rent amount, have no liens on the property, and have high loan balances compared to their current property value.
At first, the bank will maintain ownership of the properties but homes in the program will be transitioned to investor ownership, while the bank works with property management to oversee the properties. In exchange for having their outstanding mortgage debt forgiven, the homeowner will transfer the title to their property and may lease their home for up to 36 months at or below the current market rental rate.
“Our priority is designing a solution that helps our customer,” said Bank of America executive, Ron Sturzenegger. “If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community and curtail neighborhood blight by keeping a portion of distressed properties off the market.”
Bank of America is part of a recent $26 billion mortgage settlement between the major mortgage servicers and 49 attorneys general alongside federal agencies. Banks are attempting to seek out additional alternatives given the limited scope of the settlement. CoreLogic reports that 1.4 million homes are now in the foreclosure process, making creative measures to prop up housing left to either banks or law makers.