In recent years, many individuals have experienced struggles with mortgage debt and have faced foreclosure. Foreclosures can be very impactful on homeowners.
Recently, a bank has started a pilot program which may provide some homeowners who are struggling with mortgage debt with an alternative to foreclosure.
The pilot program is called the “Mortgage to Lease” program. This program reportedly will give some homeowners who are struggling with mortgage loans the bank holds the option of handing over the deed to their home to the bank and being allowed to then rent the home from the bank as an alternative to being foreclosed on.
Why might a homeowner consider such an option preferable to being foreclosed on? There are a couple of potential benefits the above-mentioned option could have for a homeowner. First, such an option would allow a person to remain in their home and not have to move. Also, it has been reported that this option might have less of a negative impact on a homeowner’s credit than a foreclosure would.
Reportedly, the pilot program is currently available to homeowners by invitation only; there is no way for homeowners to apply for this program. Thus far, the number of invitations the bank has issued to participate in this program has been relatively small and the invitations have been limited to borrowers in just a few states (Florida is not one of these states).
It will be interesting to see what happens with this program. Will this program prove popular among homeowners? Will this program eventually be expanded and become available to a wider number of homeowners? Will other banks consider such programs? What impacts will this program have on homeowners who participate in it? Will any problems/issues arise in connection to this program? One wonders how these questions will ultimately be answered.
Source: The Wall Street Journal, “BofA Tests an Option to Foreclosure,” Nick Timiraos, March 23, 2012