According to an article in Friday’s Wall Street Journal, Bank of America is rolling out a new alternative to foreclosure to a select few. That alternative: The homeowner hands over the deed to the bank and the bank lets the homeowner stay in the house as a renter. The first “wave” will be up to 1,000 homeowners in the foreclosure process in Nevada and Arizona (two states with very high foreclosure and default rates) and New York.
That 1,000 may not seem like many but you have to start somewhere. Not all the homeowners will accept the offer. Some will likely pursue the short sale option or loan modification alternative, assuming either makes sense for them and B of A has been responsive.
I think this new option is tied to another Wall Street Journal article I read earlier in the week or the previous week which essentially celebrated the move of large investors into the housing purchase and rental market via the purchase of “packages” of properties from Fannie Mae. When there’s demand, it’s always amazing how another entity will do something creative – i.e., create a new product or service – to fulfill that demand.
Anyway, I think this is a great option for Bank of America to explore. And this, especially if the deed handover/home rental option proves successful, could lead the way for B of A to clear a lot of those failed Countrywide loans off their books faster.
If you are a skilled landlord and have owned/managed a number of rental homes, I recommend you identify and contact the cash-rich entities that are buying up foreclosed properties or considering doing so. They have cash and you don’t. They need house rental management and you have it. It’s a match made between Wall Street and Main Street.