If your loan was sold to a group of investors by Citigroup, you may have a chance to rent to buy your house back also known as a lease purchase option .
How Can You Qualify for a Rent to Buy Program?
This pilot program is offered to a select few of 500 homeowners who will qualify to rent to buy their house back if they are 6 months behind on mortgage payments, are currently living in the home and it is “underwater” (meaning they owe more than the house is worth….no equity), and cannot qualify for a loan modification.
If you live in California, Nevada, Arizona, Florida, Georgia and Texas you may be one of the lucky few who will qualify for this test pilot program
How Does it Benefit You?
Your home may be offered to you as a rental for 1-3 years if you have sufficient income to continue making payments at a lower rental payment than your current mortgage loan payment. Rental/lease payments are based on current local market rates. In addition, you will have the opportunity to remain in your home.
You must sign a deed-in-lieu of foreclosure with Citimortgage/Citigroup, thereby relinquishing all rights to title, ownership and liability of a collateralized loan to Citigroup In essence, you will be released from the outstanding balance and mortgage payments on your loan. At this point, Citigroup is no longer your lender, servicer or lienholder.
Let’s Get Real!
Citigroup is conducting “business as usual.” Make no mistake… Citigroup/Citimortgage will have sold your loan to Carrington Capital Management and Oaktree Capital Management, who are investors that purchased $158 million dollars of bank-owned properties. They will be managing your “rent to buy” property for as long as they deem necessary in order to turn profits. The ownership of your home will be transferred to the two investors should you decide to participate in the deed-for-lease program.
So far, several newspapers (Associated Press, New York Times, Los Angeles Times) have been reporting this “bulk loan purchase package” as a program and solution that was launched by Citimortgage and Carrington Capital Management “to provide an alternative to foreclosure and allow eligible borrowers to stay in their homes by entering into a deed-for-lease home agreement and establishing a lease.”
This may or may not be considered a good solution for all homeowners, because homeowners will have been left at the indifference of the investors and Citigroup.
Homeowners should give careful thought to whether or not this solution would be to their advantage or detriment. Should you decide to exercise the deed-for-lease agreement, read it carefully and be sure to have it reviewed by an attorney or a qualified loan consultant .
Question what is your long term objective at the end of the term. Will the purchase price and interest rates be affordable at the end of the term, if there was no established set purchase price prior to term end. At the end of the 2 or 3 year term, will your credit be sufficient to qualify for a new loan. Are your delinquent payments and deed-in-lieu of foreclosure seasoned? Will you have the down payment and closing costs to purchase?
It reads like a viable option to keep homeowners in their home…but is it? You decide if the rent to buy program is a solution to foreclosure!
Please share your thoughts.