WSJ reports that Bank of America will take a new approach to handling mortgages which are about to go into foreclosure. The first test will be small.
It is not certain whether the plan will get government support, or whether it will affect earnings if it is rolled out en mass
Bank of America is launching a pilot program that will allow homeowners at risk of foreclosure to hand over deeds to their houses and sign leases that will let them rent the houses back from the bank at a market rate.
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.
The largest single problem the program may face is that many homeowners who cannot pay mortgages may also not be able to pay rent “at market rate”
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