Chapter News & Informations Detail
Foreclosures to Rentals
By: Claudette Bruck
Bank of America to offer rentals as foreclosure alternative.
NEW YORK – March 23, 2012 – Bank of America says it hasbegun a pilot program offering some of its mortgage customerswho are facing foreclosure a chance to stay in their homes bybecoming renters instead of owners. The "Mortgage to Lease"program, which was launched this week, will be available to fewerthan 1,000 BofA customers selected by the bank in test markets inArizona, Nevada and New York. Participants will transfer theirhome's title to the bank, which will then forgive the outstandingmortgage debt. In exchange, they will be able to lease their homefor up to three years at or below the rental market rate. The rentwill be less than the participants' current mortgage payments andcustomers will not have to pay property taxes or homeownersinsurance, the bank said. "This pilot will help determine whetherconversion from homeownership to rental is something ourcustomers, the community and investors will support," RonSturzenegger, 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 onpayments and be "underwater," owing more on their mortgagesthan 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 includereal-estate investors who buy qualifying properties and keep theoccupants on as tenants. "If this evolves from a pilot into a morebroadly based program, we also see potential benefits fromhelping to stabilize housing prices in the surrounding communityand curtail neighborhood blight by keeping a portion of distressedproperties off the market," Sturzenegger said. Foreclosure trackingfirm RealtyTrac says foreclosure activity has picked up in somestates, as banks deal with a backlog of homes with mortgages thathad gone unpaid yet remained in limbo due to delays stemmingfrom foreclosure-abuse claims. Nevada has the nation's highestforeclosure rate as of last month, with one in every 278 householdsin the state receiving a foreclosure-related filing, twice the nationalaverage, according to RealtyTrac. Arizona ranks third behindCalifornia, while New York has not been as hard hit, with one inevery 4,604 households receiving a foreclosure-related filing.
FL CCIM Chapter Legislative Chair