Foreclosures continue to plague main street Americans. Working to resolve the continuing foreclosure crisis, Bank of America has rolled out a new program that it thinks might help remedy the crisis: a deed-for-lease program, called “Mortgage to Lease.” This program, allows homeowners who face foreclosure to give/return their mortgage deeds to the bank, and then, in turn, sign leases to remain in their homes as renters. Although the program remains small—and invite-only—Bank of America is attempting to create alternatives by reaching out to homeowners rather than act adversarially. BofA does not expect the “deed-in-lieu” to continue forever. If however, the deed-for-lease program proves less costly than eviction, is less costly to the bank and does not hurt the homeowner’s credit as much as a traditional foreclosure, the program may be expanded.
BofA maintains that it remains optimistic, yet realistic. Owners, after giving up the deed, would be offered one-year leases with the option to renew, at a rate the banks determines to be at or below the current market price. And if this small program works, BofA plans to broaden the program beyond the 1,000 or so homes in Nevada, Arizona, and New York that it has initially targeted. Because of increased foreclosures resulting from the big banks fraudulent “robo-signing,” banks are looking for alternatives to foreclosure, including this Mortgage to Lease program. According to the Wall Street Journal: “One of the outcomes of the ‘robo-signing’ scandal is that it is more difficult to foreclose [now]. . . .It’s more worthwhile for the banks to pursue alternatives.”
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