BofA Borrowers in Foreclosure May Get Rent-Back Option
Bank of America announced this week that it will make an offer to a select group of its borrowers who face foreclosure: You can stay in the property, but you’ll have to rent it instead.
The bank’s pilot program, known as Mortgage to Lease, will launch in New York, Nevada, and Arizona, and be offered to about 1,000 of the bank’s borrowers.
For home owners who participate, they will still have to relinquish the title of their property. In return, Bank of America will forgive their mortgage debt and allow them to rent the home for up to three years. The rental payments for the home will be at — or below market rates — and the payments will be less than what the borrower paid in monthly mortgage payments.
The bank, which will then have title to the property, would eventually resell the homes to investors.
“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,” says Ron Sturzenegger, Bank of America Legacy Asset Servicing executive, about the pilot program.
Source: “Bank of America Tests Rental Program as Alternative to Foreclosure,” The New York Times (March 22, 2012)