From Originator News:
Bank of America is working “very hard” on a short sale-to-lease program for distressed borrowers who don’t qualify for government-backed refinance programs.
But the much-maligned bank won’t move forward until it gains assurance from regulators that borrowers are being treated fairly.
As outlined late this week by B of A executive Ron Sturzenegger at the Urban Land Institute’s fall conference in Los Angeles, the bank would regain title to mortgaged properties under a short sale arrangement, and then lease the houses back to their occupants for three years for rents that approximate the average for their particular areas.
At the end of the 36-month lease, Sturzenegger said during a panel session on capital markets, the institution would re-sell the houses to renters who wanted to buy them back. He did not say what price buyers would have to pay to reclaim ownership from the bank.
Sturzenegger, who is managing director of legacy asset servicing at B of A, said investors are interested in the program, as are borrowers. But two obstacles still need to be overcome before the program becomes operational, he said: governmental clearance and finding someone with the ability to run it.
I get why the banks would go down this path. They’re looking for cash flow and a lease option works better than free rent. Overall it’s just another program or plan that attempts to push the problem down the road. I was thinking this housing downturn would last as long as the previous 1990-1991 minor bubble and would be over by 2012. Now I’m starting to think this is going to last another decade.
We’re going Japanneza….
Not spelled out, is who pays the maintenance expenses during the lease period? For example a roof or hvac system. It seems to me that this could be structured as a lease where the tennant does and pays the maintenance costs. At a minimum a good home inspection should be done before the lease starts and the homeowner expected to bring things up to snuff before the lease starts.
Another can kicker.
The patient is already dead and continuous massive de-fib shocks are only wasting electricity…
Call the Coroner. Another victim waiting for proper disposal.
I suggest they dump the body on B of A’s CEO’s porch.
Seems like we hear of new creative ideas on a daily basis now, all with the same goal of avoiding the inevitable.
First they tell borrowers that they have to default to be considered for a loan mod, causing them to get comfortable with free rent.
They don’t want to lease, they want to live for free.
How long before the banks come out with the Guaranteed Free Rent program, where they promise not to foreclose if the borrowers just agree to stay for 3 years, no charge?
Gee, I wonder how these banks are able to stay in business when all of these homeowners are not making their payments? I’m stumped…
Leverage and the ability to borrow at less than the inflationary rate.