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Friday, December 9, 2011

BofA developing foreclosure rental programs to deal with distressed properties

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 and Fannie Mae 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. You will no longer be the owner. But you can be a tenant now in that same property and save you from moving on,'" he said.
I don't think it will be that easy.  A bank is not going on the top of the tenant like a real landlord.  In addition, if the tenant cause $20,000 damage to the place and value of the home continues to decrease isn't the bank losing even more money. 1) If the sell the home in 3 years, but it's not worth as much and tenants have done damage. 2) The can sell the non performing asset and invest the money in a performing asset that's collecting a good return.  However, if the Fed has given the banks $7.7 trillion in shadow loans in the last 3 years, so there isn't really need by the bank to find performing assets, they had cheap loans with the Federal Reserve .
Read it all

1 comment:

  1. Wow, great article, I really appreciate your thought process and having it explained properly, thank you!
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