With foreclosures still causing issues for many states and ultimately the banking industry Bank of America has announced a new mortgage program that will allow home owners to remain in their houses after facing a foreclosure.
The “Mortgage to Lease” pilot program will allow home buyers to hand over ownership of their homes to the bank at which time their mortage would be forgiven and they would be able to rent their home for a period up to three years.
The program which will roll out in test markets in Arizona, Nevada and New York will allow former home owners to pay at or below market rates for the right to stay in their house.
Bank of America says it will target homeowners who are at “considerable risk” of foreclosure, specifically those with high loan balances relative to the value of their home. The bank will also look for homeowners who have exhausted all loan modification programs and who are delinquent on their mortgage payments for a period longer than 60 days.
Not only will rent payments be lower than the customers former mortgage payments, they will not have to pay homeowners insurance or property taxes which will further lessen their load.
The Bank of America mortgage program will start with 1,000 BofA customers which an executive says “will help determine whether conversion from homeownership to rental is something our customers, the community, and investors will support.”
If the program is a success it could help stabilize home prices by keeping distressed homes off the market. Homes that remain lived in means less crime, less squatting and better kept yards, all which help home values for nearby homes.
Do you think customers will be willing to rent back the home they just lost in foreclosure or will Bank of America ultimately be stuck with empty homes as customers break ties from their bad memory?
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