Bank of America (BOA) recently issued a Press Release outlining a “Limited Pilot Test” of their “Mortgage to Lease Program.” Under this program some BOA mortgage customers will be allowed to deed their homes to BOA and become renters instead of owners.
From the BOA Press Release:
Beginning this week in targeted hard-hit markets, Bank of America will offer a limited number of mortgage customers who are facing foreclosure an opportunity to remain in their homes, but transition to tenant status, through a pilot program called “Mortgage to Lease.”
“When homeowners are struggling to make payments, owe more on their mortgage than their home is worth and face certain foreclosure, one of their greatest anxieties is the transition process they face in moving from their home,” noted Ron Sturzenegger, Legacy Asset Servicing executive of Bank of America. “This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support. This program may have the potential to further round out the broad set of solutions we offer our customers in need of assistance.”
To maintain test controls, the Mortgage to Lease pilot will be conducted strictly on a solicitation basis; there will not be any opportunity for customers to volunteer or apply for consideration. Fewer than 1,000 customers will be invited to participate in the first phase of the pilot. Initial outreach has begun to preselected customers in test markets in Arizona, Nevada and New York, three states hit hard in the housing downturn. The pilot population will include customers who meet all of these requirements:
· Have loans owned by Bank of America.
· Are delinquent for more than 60 days.
· Have exhausted modification solutions or have not responded to alternatives to foreclosure, including short sale and deed-in-lieu.
· Have high loan balances in relation to their current property value.
· Face considerable risk of ultimate foreclosure.
· Have no junior liens.
· Are still occupying the home.
· Have adequate income to make an affordable rent payment.
Pilot participants 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. The rental payment will be less than the existing mortgage payment, and the customer will be relieved from certain other homeowner financial obligations, including property taxes and hazard insurance.
Initially, Bank of America will retain ownership of the properties, working with property management companies to oversee the rental properties. Properties in the pilot program will be transitioned to investor ownership. If the Mortgage to Lease program proves viable, it may lead to a broader program, potentially involving selected real estate investors who would purchase properties that meet their predetermined specifications and keep the previous homeowners in place as tenants.
If you would like to speak with a knowledgeable real estate agent, please call Bayview Estates Realty at (516) 777-0146 today!
Read the Press Release here.