Bank of America said Thursday that it would offer a small number of customers facing foreclosure the option to remain in their homes and rent the property instead. The program highlights how investors are increasingly interested in becoming landlords on troubled properties.
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Under the terms of the pilot program, which will be offered initially to about 1,000 consumers only in New York, Nevada and Arizona, homeowners will give up the title to their property in exchange for bank forgiveness of their mortgage debt. They would then be able to rent the property for up to three years.
The rent payments would be less than the monthly mortgage payment and be set at or below market rates, according to bank officials.
At first, Bank of America would retain ownership of the properties before selling them to outside investors. If the pilot program, known as Mortgage to Lease, is successful, the bank could expand it.
A wide variety of institutional investors, including some large private equity firms, are weighing potential deals in the beaten-down housing market. Bank of America’s move could offer up potential properties for investors who are looking for opportunities.
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