Bank of America said it will offer a small number of customers facing foreclosure the option to remain in their homes and rent the property instead.
Under the terms of the pilot program — open to roughly 1,000 troubled mortgagors in New York, Nevada and Arizona — the consumer will give up the title to their property in exchange for forgiveness of their mortgage debt.
The former mortgagor would then be able to rent the property for up to three years.
The rent payments would be less than the monthly mortgage payment and be set at or below market rates, Wells said.
Fannie Mae currently is out in the market with a large REO portfolio where investors can buy foreclosed properties in bulk, but must agree to let the former mortgagors live there and pay rent.
Many institutional investors are eyeing the GSE buy-to-rent bulk REO pilot.