Mortgage To Lease Program
Bank Of America (BOFA) has initiated a financially brilliantÂ â€œMortgage To Lease Program,â€Â and this pilot program is currently being tested among 1,000 borrowers in Arizona, Nevada, and New York.
â€œMortgage To Lease Program,â€ Â is an alternative solution to prevent potential foreclosures among BOFA mortgage borrowers, whose mortgages are in the arrears or underwater.Â â€œMortgage To Lease Program,â€Â requires borrowers to sign aÂ â€œdeed in lieu of foreclosures,â€Â thereby immediately transferring ownership of the respective home to the lender.Â In exchange for theÂ â€œdeed in lieu of foreclosures,â€ BOFA will forgive the entire mortgage debt.Â Subsequently, the former mortgage borrower will have the opportunity to rent their own home back from BOFA for up to three years.
This mortgage scenario creates a Â â€œwin-winâ€Â financial solution between the borrower and the bank.Â BOFA wins because pending foreclosures and litigations can become very costly.Â BOFA converts the delinquent mortgage debts into an immediate performing asset (an occupied rental property), and BOFA avoids owning vacant financially non-performing REO properties in a declining real estate market.Â The borrower essentially wins primarily because â€œat risk borrowersâ€Â are alleviated from underwater loans, avoiding high monthly mortgage payments, and protecting FICO Scores against the potential financial disaster of foreclosures upon their respective credit ratings.
Currently,Â â€œMortgage To Lease Program,â€ is not being offered in Georgia, andÂ â€œMortgage To Lease Program,â€Â is only being offered to respective borrowers, whose mortgage loans were originated by BOFA.Â BOFA has unilateral latitude to create innovative financial solutions on the banks respective mortgage portfolio loans, and avoid toxic assets resulting from pending foreclosures.
ÂHowever, under current Federal Deposit Insurance Corporation (FDIC) rules and regulations, banks have been forbidden from becoming involved in non-banking real estate activities, e.g. renting out bank-owned properties.Â Although Housing And Urban Development (HUD) has tentatively proposed renting out foreclosed properties to eliminate toxic assets and create liquid assets, FDIC and HUD federal regulators could possibly halt BOFAâ€™sÂ â€œMortgage To Lease Programâ€Â because of a potential conflict of interest.Â Furthermore, National Association Of Realtors (NAR) may demand federal regulators mandate BOFA contract with local real estate brokerage companies to initiate BOFAâ€™s Â â€œMortgage To Lease Program.â€