Bank of America is testing out a pilot programme to help US homeowners threatened with foreclosures to remain in their homes as tenants. "This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support," Ron Sturzenegger, Legacy Asset Servicing executive, said in a statement.
"This program may have the potential to further round out the broad set of solutions we offer our customers in need of assistance." Fewer than 1,000 homeowners in hard-hit markets in Arizona, Nevada and New York would be invited to participate in the program, in which they would transfer their titles to the bank and have their mortgage debt forgiven. They would then be able to rent their homes for up to three years at or below the market rental rate. The properties will meanwhile be "transitioned to investor ownership," Bank of America said.
"If the Mortgage to Lease program proves viable, it may lead to a broader program, potentially involving selected real estate investors who would purchase properties that meet their predetermined specifications and keep the previous homeowners in place as tenants," it said. Bank of America was one of five top banks that reached a landmark $25 billion settlement with the government last month to help US homeowners still struggling after the collapse of the housing bubble in 2008. The housing crisis played a central role in the economic crisis, the worst since the Great Depression in the 1920s.
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