Bank of America starting to Lease-Back properties to Homeowners – Is it too Late?
Just as Bank of America is falling apart they go and talk about doing some good in America. Now this is all just talk at this point in time but if rolled out many home owners would be able to sell their home and still be able to live in it – just no longer be the home owner.
Since the bubble has bursted the use of a “Lease-Back Agreement” has been Illegal by all bank stating on the short sale approval letter that homeowners are not allowed to remain in possession of the home after the close of escrow.
So why now after 4 years? The answer is very simple and it has to do with the market trends as many areas are saturated with inventory(homes for sale). If the bank can not sell the home through a short sale they have to go through foreclosure and make the property a REO(Real Estate Owned). As more and more properties can not go through short sales they have to become REO and as buyers take their foot off the gas on home buying up goes the amount of home for sale!
For the past year now January 1, 2011 to present; inventory has slowly been rising in California and more so in these past 4 months. In an effort to help relieve this issue Bank of America( may I also remind you that Bank of America current owns about 70-80% of the foreclosures in California!) has been talking to large investors who want to purchase bulk amounts of property(were talking about purchases in the 100 Million Dollar range) and have the opportunity to be able to lease back to the current homeowner. (Keep in mind this practice is still illegal)
Now, what will make these investors want to purchase all of these homes? Well for starters the Lease-Back Option would have to be legal which they are in talk of doing but the biggest one is being able to purchase these properties for about 70% of their current market value.
Keep in mind these people or companies that will be purchasing these large amount of properties are going to want a discount. Why is that you ask? As any investor out there he want to be able to account for his losses so for instance if the current homeowner defaults they want to be able to sell that property quickly and not be stuck with an above market home that needs a few thousand in repairs.
Please keep in mind these are just my thoughts on the article and my own 2 cents but if you click on the link below you can check out the Full Article and read the whole story!
Read the full article from HousingWire.com here Bank of America Lease Back Options
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