St. Louis Mortgage Lending and In House Financing: BOA Rental Program

Bank of America is starting to look at a viable system to rent a home back to the borrower after foreclosure. "There are programs that we are quite interested in," said Ron Sturzenegger, who is in charge of the bank's legacy asset servicing division. "We are talking with 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 formed the division to handle the servicing for delinquent mortgages, loans no longer being written, and to sort out outstanding representation and warranty claims. As of today's date, about 35,000 employees at the bank are sorting through 1.1 million loans 60 days delinquent or worse, as stated by their third-quarter financial statement according to St. Louis mortgage 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 home loan 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.