Mortgage debt, underwater homes and foreclosures are a huge problem in the housing market today. Loan modifications and short sale options haven’t been the most popular with lenders, leaving many people stuck in a home they can’t afford. With options limited for some homeowners, a new program could just be the answer.
Owning To Rent
A new program is on the horizon to test the temperature for underwater homeowners. Bank of America is now offering homeowners a chance to stay in the home as a renter and have their mortgage debt erased, as the basis for the new “mortgage-to-lease” program. The idea is to have the homeowner deed back the title to the home to bank in exchange for a multiyear lease for renting the home at slightly less than market value. At the end of the lease, the homeowner could be given the chance to repurchase the home or the home will then be sold to another buyer.
The experimental program is being implemented to 1,000 homeowners in Arizona, New York and Nevada, who have previously been offered foreclosure alternatives such as forbearance and deed in lieu options. Bank of America is hoping to gauge consumer responses to the idea, which will determine whether the program become a model for bigger industry players Fannie and Freddie.