Bank of America said it would allow a limited number of customers facing foreclosure to remain in their homes as renters through a pilot program in the hardest-hit housing markets.
Certain customers will be offered the “Mortgage to Lease” pilot as the nation’s second largest lender emphasized that there will be no opportunity for “customers to volunteer or apply for consideration.”
Fewer than 1,000 customers will be invited to participate in the first phase of the pilot after meeting a list of requirements.
Some selected customers have already been contacted in test markets in Arizona, Nevada and New York, three states hit hard in the housing downturn.
The “pilot population” will include customers who meet all of these requirements:
- Have loans owned by Bank of America;
- Are delinquent for more than 60 days;
- Have exhausted modification solutions or have not responded to alternatives to foreclosure, including short sale and deed-in-lieu;
- Have high loan balances in relation to their current property value;
- Face considerable risk of ultimate foreclosure;
- Have no junior liens;
- Are still occupying the home;
- Have adequate income to make an affordable rent payment.
“When homeowners are struggling to make payments, owe more on their mortgage than their home is worth and face certain foreclosure, one of their greatest anxieties is the transition process they face in moving from their home,” said Ron Sturzenegger, Legacy Asset Servicing executive at Bank of America.
The pilot will help determine whether conversions to rentals can be sustained by customers and supported by communities, he said.
This program has the potential to be added to Bank of America’s permanent solutions to costumers facing possible foreclosure, he said.