Bank of America mortgage-to-lease program a good idea?
Bank of America recently launched an in-pilot program allowing underwater mortgage holders to convert their mortgages into leases and rent from the maligned consumer bank.
The market, fairly or not, is predisposed to despise whatever the bank proposes. Consumer advocates have their knives perpetually raised. But a funny thing happened when the plan was publicized just recently: Howls of protest never materialized.
Could it be that this is a good idea?
There's a certain intuitive appeal to it. For a lot of consumers, this represents a decent option. It just might allow some to stay in their homes, and preserve their current lives. My sense is that this is a great idea for some consumers who do not qualify for a modification for whatever reason. As a source of fee revenue, the jury is out, but there's some potential there. The success of the effort will depend in part on good execution on Bank of America's part. People will expect it to be a good landlord.
Unfortunately, the bank will no doubt depend eventually on local contractors for this, and that opens it up to the type of risk that engulfed it during the foreclosure fiasco. Statistically speaking, wrongful foreclosures and evictions are a mere blip. But the media was only too happy to publicize them. People will be looking for "bad landlord" stories. Still, the idea is worth pursuing.
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