CHARLOTTE, N.C., March 24 (UPI) -- Bank of America said it would turn troubled homeowners into renters without ordering them to move.
The bank said it would offer a pilot program in three states that would open the option of renting a home to borrowers who have defaulted on their mortgages.
The plan would allow the property to stay in use, which would lend itself to better maintenance and the prevention of vandalism.
Banks could also use such a system to wait out the downturn in the housing market. Instead of auctioning off a house now, while home prices are depressed, banks could allow the home to be rented temporarily.
It would be offered to homeowners when loan modifications fail to help the homeowner avoid foreclosure.
The Los Angeles Times reported Saturday the bank started the owner-to-renter program this week with 1,000 borrowers.
As is typical of banks, however, BofA still shuns the idea of becoming a long-term landlord or homeowner. The plan involves selling the home to investors within three months, or just after the homeowner makes the first rent payment. The bank is then auctioning off a home that includes an immediate income for the buyer.
Bank spokesman Dan Frahm said there were many investors interested in the program, which will start with homes worth between $75,000 and $1 million.
