For homeowners who are unable to qualify for loan modifications on their Bank of America mortgages, the bank has come up with an alternative solution: a mortgage-to-lease program. The program is being tested in four states, including California, and the idea is that instead of evicting homeowners in danger of foreclosure, they would remain as renters and the home would be sold to investors.
Close to 300 letters were sent out to borrowers the bank selected to apply for the program, and more are expected to be mailed out soon. During this trial period, Bank of America is evaluating whether or not the program could work on a national level. Their hope is to recoup more proceeds than they would under a normal eviction process, where many homeowners vandalize homes out of frustration.
And since so many evicted homeowners go on to search for single-family rentals in their same neighborhood, the program does seem to make sense. Adds B of A executive, Ron D. Sturzenegger, “It’s good for us, it’s good for the borrower and ultimately good for the community.” He currently oversees 50,000 employees handling workouts and foreclosures on troubled loans.
To qualify for this program, homeowners must be at least 60 days behind on payments and must have applied for every available loan-modification program without success.
For more information on this topic, please click here.