Bank of America’s New Role: Landlord?

Bank of America is testing a pilot program that will allow homeowners at risk of foreclosure to give their property to the bank and then lease it back at a market rate, according to today’s Wall Street Journal.

The Journal reports:

While the initial scope of the “Mortgage to Lease” program is small—the bank began sending letters Thursday offering leases to 1,000 homeowners in Arizona, Nevada and New York—it represents a big change in the way banks deal with borrowers who can’t afford their mortgages.

It would work like this, according to the Journal:

Borrowers would agree to a what is known as a “deed-in-lieu” of foreclosure, where they essentially sign over ownership of the property to the lender. This is less costly to the bank and also does less damage to a borrower’s credit than a foreclosure. Read More