Bank of America will allow a limited number of distressed or underwater homeowners in New York State to become renters of their own properties.
As part of a pilot program, the bank mailed invitations Thursday to roughly 1,000 mortgage customers, about 250 of which live in New York. Chosen candidates will have the option to transfer the title of their properties to the bank in exchange for remaining in their homes as tenants for up to three years.
“This pilot will help determine whether conversion from home ownership to rental is something our customers, the community and investors will support,” Ron Sturzenegger, Legacy Asset Servicing executive of Bank of America, said in a statement.
To qualify for the program, homeowners would need to have a loan with Bank of America and be delinquent for more than 60 days.
In addition, all options for loan modifications and other alternatives to foreclosure would have to be exhausted. But homeowners would have to have enough income to be able to afford market-rate rents for their home.
During the program, which is also being piloted in Nevada and Arizona, homeowners would transfer the title of their properties to Bank of America, which will eventually sell the properties to investors. If the pilot proves successful, the bank said it could expand the program to other markets.
Bank of America has previously come under fire for its mortgage issuance policies leading up to the housing and financial crisis. Just last month, the bank agreed to a $1 billion settlement to end investigation into whether the bank knowingly made loans to unqualified homebuyers.