Bank of America tests new home foreclosure program

Thu Mar 22, 2012 11:03pm EDT

The logo of the Bank of America is pictured atop the Bank of America building in downtown Los Angeles November 17, 2011. REUTERS/Fred Prouser

The logo of the Bank of America is pictured atop the Bank of America building in downtown Los Angeles November 17, 2011.

Credit: Reuters/Fred Prouser

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(Reuters) - Bank of America Corp (BAC.N) said on Thursday it was launching a pilot program that will allow homeowners facing foreclosure an opportunity to remain in their homes while transitioning to tenant status.

Under the pilot program known as "Mortgage to Lease," participants will transfer their property titles to the bank and have their outstanding mortgage debt forgiven, Bank of America said.

Fewer than 1,000 customers will be invited to participate in the first phase of the pilot and the bank said it has started selecting customers in test markets in Arizona, Nevada and New York -- three states hit hard in the housing downturn.

"If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community," Bank of America executive Ron Sturzenegger said.

In February, five big U.S. banks accused of abusive mortgage practices had agreed to a $25 billion government settlement that may help roughly one million borrowers but is no magic bullet for the ailing housing market.

Bank of America, which had the largest exposure to the settlement due to its 2008 purchase of the troubled subprime lender Countrywide Financial, earlier agreed to offer deeper cuts for its underwater borrowers.

(Reporting By Matt Daily and Sakthi Prasad; Editing by Edmund Klamann and Jonathan Hopfner)

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Comments (2)
APJLAW wrote:
Would BOA be entering into one year leases, or would be owners now tenants be month to month? If the later, the former owner is not much more than a care-taker while BOA try to sell off their home.

Mar 23, 2012 11:11am EDT  --  Report as abuse
All the government had to do was tell the banks to temporarily increase the terms on these mortgages and nobody would have had to leave their homes. Simple software change.

Not too many creative thinkers left in this country.

Mar 25, 2012 2:43am EDT  --  Report as abuse
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