Home Lease Exchange LLC, a San Jose, Calif.-based firm, is launching a free service that the company says enables homeowners facing foreclosure to enter into long-term leases with other homeowners facing foreclosure living near them.
Upon execution, homeowners send a copy of the lease to their service to notify them of their obligation to disclose to prospective buyers that a long-term lease encumbers the property. Buyers at trustee sales will not buy homes if they're encumbered with a five-year lease, Home Lease Exchange says.
The strategy plays off of the Protecting Tenants at Foreclosure Act (PTFA), a piece of the federal Helping Families Save Their Homes legislation passed in May 2009. The PTFA requires servicers to abide by the terms of ‘bona fide’ leases that are tied to foreclosed properties.
When the PTFA was originally passed, expectations were high that homeowners facing foreclosure would increasingly enter into long-term leases that would, in turn, delay evictions. According to eviction attorneys who have spoken with Servicing Management of late, fears over the PTFA were overblown, and instances of the dreaded five-year leases have been few and far between up to now.
Home Lease Exchange, which is operating its service through the website ForceYourLenderToModify.com, says its strategy forces servicers to decide between becoming landlords or modifying mortgages.
‘Banks don't want to be landlords, so their best option is to modify the loan for the current homeowner,’ says Michael Levin, managing director of Home Lease Exchange.Â ‘Homeowners can then cancel the lease if a modification occurs.’
If a bank selects foreclosure, Home Lease Exchange enables the homeowner to move from their home and lease one in their neighborhood that has also been foreclosed, the firm says.
‘The lease agreements facilitated through Home Lease Exchange are safe havens for struggling individuals and families by providing no credit checks or security deposits,’ adds Levin. ‘Only the first month's rent is required to move into a property. Homeowners will be making the lease terms easy through Home Lease Exchange because they realize that helping one another is their only defense against a system stacked against them.’
SOURCE: Home Lease Exchange LLC