BofA to offer rentals as foreclosure alternative
Bank of America says it has begun a pilot programme offering some of its mortgage customers who are facing foreclosure a chance to stay in their homes by becoming renters instead of owners.
The Mortgage to Lease programme, which was launched this week, will be available to fewer than 1,000 BofA customers selected by the bank in test markets in Arizona, Nevada and New York.
Participants will transfer their home's title to the bank, which will then forgive the outstanding mortgage debt. In exchange, they will be able to lease their home for up to three years at/or below the rental market rate. The rent will be less than the participants' current mortgage payments and customers will not have to pay property taxes or homeowners insurance, the bank said.
"This pilot will help determine whether conversion from home ownership to rental is something our customers, the community and investors will support," Ron Sturzenegger, legacy asset servicing executive of Bank of America, said in a statement.
Among requirements to qualify for the programme, homeowners must have a BofA loan, be behind at least 60 days on payments and be "underwater," owing more on their mortgages than their homes are worth.
The bank based in Charlotte, North Carolina, said it will at first own the homes, then sell them to investors. If the programme is successful, it could be expanded to include real-estate investors who buy qualifying properties and keep the occupants on as tenants.
"If this evolves from a pilot into a more broadly based programme, we also see potential benefits from helping to stabilise housing prices in the surrounding community and curtail neighbourhood blight by keeping a portion of distressed properties off the market," Sturzenegger said.
Foreclosure tracking firm RealtyTrac says foreclosure activity has picked up in some states, as banks deal with a backlog of homes with mortgages that had gone unpaid, yet remained in limbo due to delays stemming from foreclosure-abuse claims.
Nevada has the nation's highest foreclosure rate as of last month, with one in every 278 households in the state receiving a foreclosure-related filing, twice the national average, according to RealtyTrac.
Arizona ranks third behind California, while New York has not been as hard hit, with one in every 4,604 households receiving a foreclosure-related filing.
- Kraft Foods to rename snacks company Mondelez
Kraft Foods Inc announced last Wednesday that its new global snacks company will be named Mondelez International Inc.
Mondelez was inspired by the suggestions of two Kraft employees. It is intended to evoke the idea of a 'delicious world' as 'monde' is derived from the Latin word for 'world' and 'delez' as an expression of "delicious."
Kraft announced in August that it would be splitting in two by the end of 2012, so both sides of the business could focus better on their priorities.
The North American grocery business will continue to carry the company name as Kraft Foods Group Inc, selling products such as Maxwell House coffee and Oscar Mayer meats. Its larger global snacks business will take on the new name creation to sell Trident gum and Cadbury chocolates in fast-growing countries worldwide.
Kraft said it asked employees from around the world to suggest names for the new company. More than 1,000 employees submitted more than 1,700 names for consideration. Mondelez International is a mix of suggestions from two employees - one in Europe and one in North America.
The company's shareholders will have to approve the name at a meeting in May.
If approved, the name will take effect before the end of the year. The company has also reserved the stock symbol 'MDLZ' for trading under the new name. The new stock symbol for its grocery business will be revealed at a later date.
Kraft, based in Northfield, Illinois, is one of the world's largest food makers.