St. Louis Mortgage and Home Loan: Bank of America's Alternative Rental Solution

Bank of America is viewing an alternative process to rent a home back to the borrower after foreclosure. "There are real answers to these financial problems," said Ron Sturzenegger, who leads the bank's legacy asset servicing division. "We want to meet with potential investors that would come in and invest in these properties and would lease them back to who would now be the now tenant."

In February, BOA created a separate department to handle the servicing for delinquent mortgages, loans that are not being approved, and to sort out outstanding representation and warranty claims. Currently, more than 35,000 employees at the bank are starting to sift through 1.1 million loans 60 days delinquent or worse, according to its third-quarter financial statement according to St. Louis home loan news reports.

The Federal Housing Finance Agency (FHFA) is creating an REO rental program for Fannie Mae and Freddie Mac. It received more than 4,000 ideas on [how to do it] says St. Louis mortgage experts. But private banks own [$50.4 billion] worth of REO properties, too, according to the Federal Deposit Insurance Corp., and millions of these homes are sitting vacant. Sturzenegger [described how their idea would work].

"[We are looking at programs] where you can [capture somebody] before the REO process and offer a deed-for-lease. [We would go to the customer and say}}, ‘We'll do a short sale. Will you be interested in leasing your property back? We're still going to sell the property. Yes, the current person will no longer own the home. But you can be a tenant now in that same property and save you from moving on,'" he said.