Bank of America (BofA) foreclosure rental program and California – Just over a week ago, BofA announced that it was testing a new foreclosure rental program to help underwater borrowers stay in their homes as renters.
The program is being implemented in the selected states of Arizona, Nevada, and New York but not California where foreclosures have greatly impacted homeowners. The program called “Mortgage to Lease” has long been talked about since the housing crisis began but is now finally being piloted in these states. Whether California will be included in the program remains to be seen as Rick Simon a BofA spokesman has said in online reports that it’s too early to tell.
What’s the “Mortgage to Lease” program really all about?
Underwater borrowers can transfer title of their homes to BofA and live in the home as renters for up to 3 years and pay fees less than the monthly mortgage amount of the loan. The property taxes and hazard insurance would not be the liability of the renters/borrower in this program and the rest of outstanding balance of the loan will be forgiven.
There are other criterias as part of the program to qualify borrowers
such as they must be behind more than two months on their mortgage,
still live in the home, and the loan is owned by
BofA. If you’re one of the approximately 1,000 borrowers preselected by BofA for the program it could seem like a fairly reasonable option to foreclosure.
Questions about the “Mortgage to Lease’ program
There are obvious questions which are not clear about the program like:
1. What happens at the end of the lease? Can the renter/previous owner buy back the property?
2. What if there’s a second lien on the house?
3. How long will it be before BofA decides to include other states and based on what factors?
4. How will the success or failure of the program be measured?
For now, only time will surely tell if this pilot program will be successful, grow to other states and even be adopted by other lenders.
Other options instead of “Mortgage to Lease” –
If you’re reading this article and you don’t qualify for the “Mortgage to Lease” you may want to consider a short sale instead of foreclosure. A short sale is where a bank accepts a negotiated settlement to receive payment for less than the mortgage owed. Contact us for a free consultation.
Lorraine Santirosa is a San Diego short sale specialist. http//www.buyhousesinsandiego.com