Bank of America to Become Giant Landlord
Last week, Bank of America announced a new program that took many by surprise. Its pilot “Mortgage to Lease” program will enable some homeowners at risk of foreclosure to stay in their homes as renters.
- Homeowners must have their mortgage through BofA;
- They must be more than 60 days late on their home loan;
- With no other liens on their property, and
- A high loan balance to property value ratio.
In addition, those chosen for the program must have an income high enough to afford the rent on their former home.
The bank will be selecting homeowners to participate in the limited pilot program. Up to 1,000 homeowners in Arizona, Nevada and New York will be eligible. If the program is a success, it could be expanded. Homeowners may not apply for the program; they will be selected by the bank.
How the program will work:
- The homeowner transfers the title to their property to the bank.
- The bank forgives the outstanding mortgage debt.
- The former homeowners may lease their home for up to three years at current market rents.
- BofA will retain ownership at first, but will eventually transition ownership to investors.
- Property management companies will supervise the rental properties.
But, what happens after three years? Does the house then get sold to an investor? Do the tenants get kicked out of their home? Are they allowed to extend their lease? Can they buy their home back from BofA?
Has BofA come up with a way to earn income for three years while waiting for the market to improve, so they can sell at a profit?