Bank of America has a new program targeted at homeowners who are in the foreclosure process. Only with this program there happens to be one big caveat. You agree to give up your home. No more modification attempts, no more endless submissions of paperwork. You sign a Deed in Lieu giving up any rights or claims you have in your property, returning it to your lender. With a simple stroke of the pen, you transcend home ownership.
Signed, Sealed, Delivered. Tenant.
The program will be administered by real estate agents who have been trained in the process and protocols. Homeowners will be preselected by Bank of America for participation in the program.
In these days of home ownership, there is no shortage of programs aimed at homeowners in default, only a shortage of programs that have proven successful.
Why This, Why Now?
As a real estate broker who has participated in a similar program I have contacted homeowners facing foreclosure. This program offered homeowners the opportunity to enter into a pre-approved short sale. No further authorizations or approvals needed. Sell the home, avoid foreclosure and earn $2500 after escrow closes as a relocation allowance. I have called them and left repeated messages. I have met them on their front porch and I have been invited to sit at the kitchen table. Most have been very courteous, some a bit hostile.
The consensus is participation rates are very low. The reason I believe is due to a false hope among homeowners. They feel as long as they are in a modification process there is a chance a solution will be achieved and they can keep their home. Some property owners who have been declined a modification have been encouraged to apply again.
The Devil is in the Details
With this new program, the homeowner will be offered market rate rents and can occupy the property for up to three years. It is also my understanding that B of A will make needed repairs to the property if needed. However if you don’t make the payment you can face a possible eviction.
The Big Question
Can the program be successful? I see three possible outcomes:
- Will homeowners who have basically been living in the home without making a payment for 12 – 24 months now be willing to pony up a monthly rent check to cover their housing expense?
- Or have property owners become so accustomed to living in the house without any monthly financial commitment balk at having a new monthly obligation?
- Will the homeowner continue and stay in the house refusing to short sale or lease and say “Catch Me If You Can” ?
Kudos to Bank of America for introducing new solutions to the housing issues facing the economy. They have an insurmountable task.