Bank of America Corp., the second-largest U.S. bank, started a program this week to allow mortgage borrowers facing foreclosure to stay in their homes as renters while transferring title back to the lender.
The pilot program, dubbed “Mortgage to Lease,” will begin with fewer than 1,000 borrowers in Arizona, Nevada and New York, the bank said today in a statement. Homeowners will transfer title to the bank and have their mortgage debt forgiven, the lender said. They’ll then be able to lease the home from the bank for as many as three years, at or below market rates.
“Our priority is designing a solution that helps our customer,” Ron Sturzenegger, who oversees the bank’s unit managing foreclosures and soured loans, said in the statement. “If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community.”
Chief Executive Officer Brian T. Moynihan is seeking to limit additional costs from faulty loans after the 2008 takeover of Countrywide Financial Corp. helped saddle the Charlotte, North Carolina-based bank with about $42 billion in expenses. The bank will own the properties, hire management companies to oversee them, and after some time sell the homes to investors, the statement said.
Borrowers in other states won’t be able to volunteer or apply for consideration in the initial trial program, according to the statement.