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‘Mortgage to Lease’ Provides Alternative to Foreclosure for some Struggling Homeowners

Posted by attorney Timothy Kingcade

For homeowners who are struggling to afford their monthly mortgage payments, ‘mortgage to lease’ or ‘deed for lease’ is an option for a select few. Fannie Mae introduced a rent-back program in 2009, and this year, both Bank of America and CitiMortgage announced that they would try a similar approach in a handful of markets. The programs are basically an extension of what’s known as “deed in lieu of foreclosure." In this process, the lender agrees not to foreclose if the homeowners simply hand over the deed to their property.

The new element is a rental option: after relinquishing the deed, homeowners who meet certain requirements may sign a lease to stay on as renters for one to three years (depending on the lender). This option is a good fit for families seeking to stay in their homes and keep their children in the same school district. Borrowers benefit because a deed-in-lieu looks better than a foreclosure on a credit report, and outstanding mortgage debt is forgiven.

To qualify, applicants must not be more than 11 payments past due on their mortgage, and must be able to pay fair-market rent without spending more than 31 percent of their gross income. Properties with second mortgages are ineligible, as are properties in areas where zoning or homeowners’ associations prohibit rentals. The condition of the property is also a factor.

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Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Foreclosure defense attorney, Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia, P.A. website at

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