Posted on 03/23/2012 10:47:09 AM PDT by TopDeadCenter
NEW YORK — Bank of America says it has begun a pilot program offering some of its mortgage customers who are facing foreclosure a chance to stay in their homes by becoming renters instead of owners.
The "Mortgage to Lease" program, which was launched this week, will be available to fewer than 1,000 BofA customers selected by the bank in test markets in Arizona, Nevada and New York.
Participants will transfer their home's title to the bank, which will then forgive the outstanding mortgage debt. In exchange, they will be able to lease their home for up to three years at or below the rental market rate. The rent will be less than the participants' current mortgage payments and customers will not have to pay property taxes or homeowners insurance, the bank said.
"This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support," Ron Sturzenegger, legacy asset servicing executive of Bank of America, said in a statement.
Among requirements to qualify for the program, homeowners must have a BofA loan, be behind at least 60 days on payments and be "underwater," owing more on their mortgages than their homes are worth.
The bank based in Charlotte, N.C., said it will at first own the homes, then sell them to investors. If the program is successful, it could be expanded to include real-estate investors who buy qualifying properties and keep the occupants on as tenants.
"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," Sturzenegger said.
Foreclosure tracking firm RealtyTrac says foreclosure activity has picked up in some states, as banks deal with a backlog of homes with mortgages that had gone unpaid yet remained in limbo due to delays stemming from foreclosure-abuse claims, according to
Nevada has the nation's highest foreclosure rate as of last month, with one in every 278 households in the state receiving a foreclosure-related filing, twice the national average, according to RealtyTrac. Arizona ranks third behind California, while New York has not been as hard hit, with one in every 4,604 households receiving a foreclosure-related filing.
Scamvillage.
Am assuming - perhaps wrongly - that it is no longer 'your own home'; by the time you send that first rent check in to BOA.
Are they holding these 'temporarily' or is this just a 'variation' of a reverse mortgage; with a twist. . .
Why would they pay rent, they already can’t/aren’t pay/ing the mortgage.
Mixed emotions on this.
They lied, cheated, and stole through all of this. Now they are going to own the assets, which will be serviced, more or less, by the renter for at least three years.
They were/are going to get the property back anyway through foreclosure. I guess this makes the buyer whole again from a credit standpoint (it damn well better).
It allows the bank a do-over on the loan docs (you can bet the ones they’ll do this for first are the ones with the most cocked-up document packages).
These guys are going to roll up a WHOLE bunch of serviceable rental property in a big hurry, and they are going to turn the whole thing into a company which will either go public, or stay private but sell for quite a premium over what each property is worth today.
Just underlines the new, old, saying:
If you want to rob a bank, get a gun.
If you want to rob a nation, get a bank.
my my my....just as certain Leftists and other Obama hangers-on had suggested.
It’s a three year eviction, basically.
With cash flow.
People are paying zilch to live for months or even years in their foreclosed homes.
If your mortgage delinquency is the ONLY black mark in your credit history, then maybe it makes sense to make the deal with your bank, pay rent, and wash that black mark away.
But I suspect most of these people have a credit history that looks like a toxic waste dump.
In that case, just stay there, rent free, until the cops throw you out.
If they are foreclosed on they will have to pay rent somewhere, they are not going to live in their cars
Not sure that program will work.
House payments tend to be less than the rental rate for like properties.
If a person cannot afford a house payment, chances are, they cannot afford the typical rental payment.
They might also be hit by the IRS for the difference between a lesser amount they might pay and the going rate for comparable rentals.
This cannot end/go well. Further enabling...after making the toxic loan...doesn't take care of the problem.
‘they will not have to pay property taxes’
How does that work? I guess BOA is going to pay them? A lot of positive or negative side effects can occur with this.
Also, who will maintain the house?
Will BOA just become a property management company? Or will this actually be a money maker for them?
“Participants will transfer their home’s title to the bank”
Once the bank has the title, there is no need for the bank to go through a long and expensive forclosure process, the renter misses a payment, bam, they are evicted, and the property still has more value than it would at a foreclosure sale.
I like my program better. It is called the “trade down” program.
Let’s say you have too much home and too large a mortgage. The bank also has a number of foreclosed properties it cannot sell.
You trade your property into the bank for a property of lower value. You still have a mortgage but lower, the bank gets a higher value property which will be easier to sell later on.
You would just need to figure out the money piece on the difference.
This is the beginning of Zero’s “Foreclosure to Rental Plan” with his buddies at BofA. This is also a way for the administration to show a drop in foreclosed homes as an erroneous metric to a rebounding economy.
To long time readers of The New American, this proposal will look familiar.
Interesting points. The latter a particularly good stat before November, no doubt.
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