Distressed borrowers with negative equity have another alternative to foreclosure that lets them stay in their current homes. It’s the second such program unveiled this year.
In March, Bank of America Home Loans launched “Mortgage to Lease,” an invitation-only program for less than a thousand distressed borrowers in hard-hit housing markets located in Arizona, Nevada and New York.
The pilot enabled delinquent borrowers to avoid the humiliation of foreclosure while maintaining local social networks.
On Wednesday, CitiMortgage Inc. announced a similar program dubbed the Home Rental Program.
Distressed borrowers can stay in their homes by entering into a deed-for-lease home agreement and establishing a lease.
A new vehicle for the program has been established as a partnership by Carrington Capital and Oaktree Capital Management L.P. Carrington will service the loans, and Oaktree will act as investment manager for certain investment funds.
CitiMortgage kick started the program by transferring the ownership of loans in its portfolio through the sale of $158 million in mortgages to the Carrington-Oaktree partnership. The loans are secured by properties in Arizona, California, Texas, Florida, Nevada and Georgia.
Borrowers can qualify for the program if their loans were included in the portfolio sale and they cannot obtain a loan modification even though they can afford monthly rental payments. Their loan balances must exceed the value of their homes, and they must be 120 days past due.
Only owner-occupied properties are eligible.
Related:
BofA Tests Deed-in-Lieu Rentals
A new program being tested by Bank of America Home Loans on a limited number of delinquent mortgages would enable borrowers to hand over the titles to their properties but stay on as renters. The program could be expanded if it proves successful.
