BoA Testing Distressed Homeowner-to-Renter Program in Three States


Another program to keep distressed
borrowers in their homes was announced this morning by Bank of America.   “Mortgage
to Lease
” will start immediately as a pilot program for 1,000 preselected homeowners
in three states, Arizona, Nevada, and New York, which have been particularly hard
hit by foreclosures.

The program will forgive all mortgage
and allow homeowners to remain as tenants in their homes for a period of
three years after surrendering their deed to the bank.  Rents will be set at a level below the
homeowner’s previous mortgage payment and at or below local market rents.  Homeowners will be relieved of other
obligations such as property taxes and homeowner insurance.

The bank has already begun outreach to
customers it has determined are appropriate candidates for the pilot and will
not accept applications or volunteers at this time.  Those selected to participate must have loans
owned by Bank of America and still be residing in the home.  In addition they must meet the following

  • Have exhausted modification
    solutions or have not responded to alternatives to foreclosure, including short
    sale and deed-in-lieu.
  • Have high loan balances in relation
    to their current property value.
  • Face considerable risk of ultimate
  • Have no junior liens.
  • Have adequate income to make an
    affordable rent payment.

“When homeowners are struggling to
make payments, owe more on their mortgage than their home is worth and face
certain foreclosure, one of their greatest anxieties is the transition process
they face in moving from their home,” noted Ron Sturzenegger, Legacy Asset
Servicing executive of Bank of America. “This pilot will help determine whether
conversion from homeownership to rental is something our customers, the
community and investors will support. This program may have the potential to
further round out the broad set of solutions we offer our customers in need of

Bank of America will initially
retain ownership of the properties, assigning their oversight to property
management companies and plans to eventually sell them to investors.  If the pilot program is successful, the bank
may expand it to other locations in this format or it could avoid ownership by
acting to facilitate the direct purchase of properties by investors who would
allow the owners to stay on as tenants. 

“Our priority is designing a
solution that helps our customer,” said Sturzenegger. “If this evolves from a
pilot into a more broadly based program, we also see potential benefits from
helping to stabilize housing prices in the surrounding community and curtail
neighborhood blight by keeping a portion of distressed properties off the

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