Bank of America announced that they were launching a pilot program to turn defaulted owners homes into rentals…and defaulting owners into tenants. Here are the details.
* Borrowers would agree to a what is known as a “deed-in-lieu” of foreclosure, where they essentially sign over ownership of the property to the lender.
* Former owners would be offered one-year leases with options to renew the leases in each of the following two years at rents that the bank determines are at or below the current market price.
* The bank began sending letters Thursday offering leases to 1,000 homeowners in Arizona, Nevada and New York.
* Borrowers would have to demonstrate an ability to pay the market rent. In other words, the former owners would have to apply to lease their homes back from B of
* Rents would be based on a BofA formula. For example, a soon to be former owner with a $250,000 mortgage and monthly payments of $1,600 could swap the house for a lease, renting the home for $900.
* Borrowers selected for the program must be at least two months past due on their mortgage and face considerable risk of foreclosure.
* Bank of America is reaching out to borrowers who have exhausted other alternatives to foreclosure or who haven’t responded to earlier solicitations.
* Homeowners with second mortgages or other liens won’t be selected.