BofA (BAC) May Offer New Alternative to Foreclosure
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Can't afford your home but don't want to foreclose? Well, Bank of America might just have the right solution for you!
According to reports out Friday, BofA (NYSE: BAC) may allow those on the brink of foreclosure to instead sign over the deed to their house and then rent it back from BofA.
As of Thursday, BofA sent out letters to 1,000 homeowners in Arizona, Nevada, and New York offering the "Mortgage-to-Lease" program, according to the WSJ. This is a unique program being offered by a large bank, with previous efforts to help out homeowners leaning more toward mortgage modification to reduce monthly payments.
The WSJ said banks are unlikely to expand on the leaseback program unless the costs of eviction are more than those of reacquiring a property, maintaining it, and reselling it. Should a majority of borrowers be willing and able to participate in the program, BofA would then sell the homes to private investors who would agree to keep the properties as rentals.
The following is one example the WSJ gives:
Based on a sampling of home values and rental rates in Phoenix recently, a consumer with a $250,000 mortgage and monthly payments of $1,600 could swap the house for a lease, renting the home for $900, depending on the condition of the property and the neighborhood.
Shares of BofA are 1.2 percent lower Friday morning.
According to reports out Friday, BofA (NYSE: BAC) may allow those on the brink of foreclosure to instead sign over the deed to their house and then rent it back from BofA.
As of Thursday, BofA sent out letters to 1,000 homeowners in Arizona, Nevada, and New York offering the "Mortgage-to-Lease" program, according to the WSJ. This is a unique program being offered by a large bank, with previous efforts to help out homeowners leaning more toward mortgage modification to reduce monthly payments.
The WSJ said banks are unlikely to expand on the leaseback program unless the costs of eviction are more than those of reacquiring a property, maintaining it, and reselling it. Should a majority of borrowers be willing and able to participate in the program, BofA would then sell the homes to private investors who would agree to keep the properties as rentals.
The following is one example the WSJ gives:
Based on a sampling of home values and rental rates in Phoenix recently, a consumer with a $250,000 mortgage and monthly payments of $1,600 could swap the house for a lease, renting the home for $900, depending on the condition of the property and the neighborhood.
Shares of BofA are 1.2 percent lower Friday morning.
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