Bank of America (BAC) is offering mortgage customers who are facing foreclosure a chance to remain in their homes.
Participants of BofA’s pilot program, expected to affect fewer than 1,000 homeowners, will transfer property titles to the bank and forgive outstanding mortgage debt. In exchange, the former homeowners will lease their home for up to three years at or below the current market rental rate.
Only customers who have loans owned by BofA, are delinquent for more than 60 days and exhausted modification solutions are allowed to participate.
The rental payment will be less than the existing mortgage payment, and the customer will be relieved from other homeowner financial obligations, including property taxes and hazard insurance.
“This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support,” said Ron Sturzenegger, a legacy asset servicing executive at BofA.
The program, called “Mortgage to Lease,” is being conducted on a solicitation basis. Customers cannot volunteer or apply for consideration. Outreach began to preselect customers in test markets in Arizona, Nevada and New York.
If the program proves viable, it might lead to a broader program involving selected real estate investors who would purchase properties that meet their predetermined specifications and keep the previous homeowners as tenants.