Facing foreclosure? Rent your home from the bank

Gerry Boughan/Shutterstock.com

(MoneyWatch) Underwater homeowners facing foreclosure may have a chance to stay in their homes. According to a press release issued Wednesday by CitiMortgage, the mortgage giant has partnered with Carrington Mortgage Services LLC to establish the Home Rental Program.

The pilot program will be tested in six markets, most of which have been hit hard by the housing crisis. The markets include Arizona, California, Texas, Florida, Nevada and Georgia. To start, the program will offer help up to 500 homeowners in need of help.

The program is designed to provide an alternative to foreclosure, allowing eligible buyer to stay in their homes as tenants with the bank acting as landlord. Under the deed-for-lease agreement, the rental rate would be based on local market rates.

"CitiMortgage remains committed to finding solutions that can ease the burdens of distressed homeowners," Sanjiv Das, CEO of CitiMortgage, said in a press release. "In addition to helping families by keeping homes occupied, the program assists neighborhood revitalization and stabilization efforts, which are crucial to the nation's economic recovery."

To be eligible for the deed-for-lease program, homeowners must:

To kick-start the program, CitiMortgage has sold $158 million in mortgages to the Carrington/Oaktree partnership, thereby transferring ownership of the loans.

Eligible candidates are not required to accept the deed-for-lease option, but Carrington says in the press release that those who do will receive manageable monthly payments and a customized lease term.

The program does have detractors: Daniel Indiviglio from Reuters writes that "creating bonds from monthly tenant payments faces serious obstacles," noting the "lack of infrastructure for appraising how rentable a home is and at what price."

CitiMortgage is not the only big bank to offer this program. In March, Bank of America launched a similar pilot program for 1,000 borrowers in Arizona, Nevada and New York. The bank expanded the program to 1,500 consumers in California in May.

[Jhihmoac]

Some peeps can't make the mortgage as it is...The rent isn't going to fair any better, and one still has nothing to show for it...

[Versability]

Foreclosure is nothing to be ashamed of. Banks have been systematically robbing homeowners via false placement of illegally and artificially inflated Force-Placed Insurance premiums since 1994. These premiums have been proven to create a negative escrow, which leads to doubled mortgage payments, blocked property tax payments, and denied loan modifications, amongst other heinous crimes.

Read chapter 2 of my firsthand account as a bank whistleblower exposing the largest bank fraud in history here: http://thoughtforyourpenny.blogspot.com/2012/07/the-boy-who-cried-force-placed.html.