Test program in Nevada, Arizona and New York State
Bank of America Corp. announced that it is launching a test program for one thousand homeowners in Nevada, Arizona and New York — whose loans are distressed and for whom loan modifications have not worked — that will allow them to turn in the deed to their home (deed-in-lieu) in return for the opportunity to rent their home at or below market rates for up to three years.
Bank of America hopes to be able to off-load these homes to investors — as rental properties with income — within three months of the transaction with the borrower. The bank expects the test to yield hard numbers that will show whether this solution is financially preferable to the foreclosure process for loans that have exhausted all modifcation efforts. (via Los Angeles Times Business)
After loan modification options are exhausted
Bank of America’s “Mortgage to Lease” program is being tested with borrowers
…who have been previously offered a variety of possible alternatives to foreclosure — loan modifications, forbearance on payments, short sales and "deeds-in-lieu," where the borrower hands the property title back to the bank and moves out… But they either have not been able to qualify or have not responded to the bank's proposals. They're now essentially at the end of the line — there are no other standard lender remedies available to keep them out of foreclosure.
Investors are jumping on the band-wagon
There has been a significant movement by investors to buy foreclosed properties and turn around and rent them — big name investment institutions like Berkshire Hathaway, Starwood Capital, and Oaktree Capital have all announced their intention to purchase foreclosed homes. And Fannie Mae recently announced that it is going to test a project to sell pools of single-family homes to investors. (via Huffington Post Business)