Video: Testing alternative foreclosure programs

Bank of America will now offer customers facing foreclosure the option to rent their home, for less money than the mortgage. CNBC?s Diana Olick talks about the program, which will be tested in New York, Nevada and Arizona.

>> half-hour with the test run of a new program aimed at keeping struggling homeowners inside their own homes. bank of america says it will offer the option to rent their home for less than the money than mortgage. the program will be test in the new york , arizona. if it is success tfl bank tells the new york time it can be expanded. real estate correspondent diana olick joins me from washington, d.c. explain to us how this program will work. it will obviously take folks from a mortgage into a leasing program. again they get to stay in their own homes?

>> yeah. that's the idea. they want to help people stay in their own homes but they cannot afford to pay the mortgage. what they're offering. this is a pilot program . it will be less than 1,000 people can't be offered this. you can't apply for it. they're saying if you trade in the deed to your home, they will offer you a rentback. a rental lease as if you were renting anybody else's home and you can stay in the home. eventually they will sell the home to an investor if this program works out, if they widen the program out. the biggest question is how many people will really want to do this. a lot of bad feeling about the bank foreclosing out. do you really want to rent back from the bank? in states like new york where the foreclosure time lines are really long, three years, a lot of folks have been sitting in their home without paying a mortgage payment for up to two or three years so why would they want to pay rent now? we spoke to some executives. they say this is a pilot program them want to get the answers to these questions.

>> how do people qualify for this if there are certain people throughout where their ears are perking up to a program like this. how tough will it be to qualify?

>> again, it will be an by invitation only program. i'll give you a couple. your bank has to be owned by bank of america . you have to be delinquent for more than 60 days and you have to have exhausted all tries to modify the home and alternatives like short sales. you have to have a high balance on your loan in relation to your current property value so you're at risk of foreclosure. no junior leans. you have to still be living in the home and you have to have adequate income to make that rental payment. if you meet all those, you're good to go if they ask you.

>> thanks so much. just passing along to everybody, don't forget to check out diana's blog. you can do so at realty check.cnbc.com.

Source: http://video.msnbc.msn.com/newsnation/46837385/

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