Thats some pretty interesting stuff. I am going to bookmark this so I can share it with others in the office

This may be naive, but...why have they not been doing this for years? I understand that the banks would rather get more money by reselling the property, but this just saves so much trouble on both sides. Plus, many foreclosures are just sitting empty, losing money for the banks either way. The homeowners are going to have to leave and find a rental anyhow, so why not let them pay rent, keep their kids in the same schools, and not have to come up with the cost of moving? The homeowners want to buy the house back so they'll take much better care of it, too. Good job on CitiMortgage's part for giving this a try.

That's awesome, but I wish they would hire local real estate agents to do the property management for them.

It's also a great way to circumvent paying foreclosue fees, cash for keys, and commissions to sell the inventory.  Why would the bank need Realtors to generate lease agreements?  They could set something up in-house to handle the volume, have more control over lease terms, eliminate the need for outside help or representation, and save accounting from having to pay out on commissions.  Unless, they are looking to hire outside companies to lease and establish property management on these rentals?

Don't kid yourself; this is not an effort purely of goodwill towards borrowers.  I just can't imagine why Carrington/Oaktree would engage the RE community to assist with this effort, I wouldn't get my hopes up. What statements from CITI/Carrington/Oaktree has anyone seen indicating they have plans on allowing ex-borrowers/now tenants to re-purchase the home? It would only make sense that at the point of sale, ex-borrowers/now tenants will have to qualify like anyone else for the new purchase mortgage if they want the home back otherwise nothing is solved.  I think it's easy to understand why this hasn't been done in the past, the details aren't clear on the structure between the parties, but it appears CITI is getting the non-preforming loans off their books, I'm sure at a loss still, while Carrington/Oaktree is getting the non-preforming loans, then title from the owners in exchange for a lease agreement.  My guess is that the plan is for Carrington/Oaktree to one day sell these assets -in a stronger market - and for CITI to somehow share in the overall sale/rent revenue produced, eventually resulting in less loss to CITI than a foreclosure/sale would produce now. Carrington/Oaktree are buying a rent revenue stream that won't cover the face value of the non-preforming notes they bought, so the plan must be counting on appreciation to make up for it.  I'm sure it's been hard to find a partner willing to do this, that's why it hasn't been done previously. I think it's a plan primarily designed to lessen the losses CITI would otherwise have through foreclosure/REO sales and they've found a partner who's willing to bet on the eventual appreciation for a share of it. To some degree it will help shorten the markets recovery by reducing the REO inventory which helps CITI and all other holders of non-preforming assets get more (suffer less loss) from those assets they must foreclose on and sell now. Carrington/Oaktree has the benefit of competing in the "REO to Rental" asset space without having to compete to purchase assets, a great one up on the likes of Colony, Amicor, Blackstone, Silverbay, Two Harbors, Am. Homes for Rent, and all the others who've jumped in.

On further thought, perhaps my previous opinions are wrong.  This may just be Carrington/Oaktree's sharp skills in buying REO to Rental assets in bulk and alowing CITI some goodwill in the public eye without any future share in the revenue produced by them.

Pondering this even further, perhaps if CITI has pre-screened the borrowers to know they qualify to pay the rent and explaining the alternative to them and maybe even gotten the borrower's buyin to it before selling the note to Carrington/Oaktree, then what a sweet deal for Carrington/Oaktree.  If so, Carrington/Oaktree has dramatically increased their funds return and reduced thier risk in that they will face much lower costs than on a vacant property to bring it to the point of being rent-ready and producing revenue. Lower if no re-hab cost and no non-revenue producing hold period while it's being made rent ready and a tenant sought!  This might also justify Carington/Oaktree willingness to pay CITI a slightly higher price for the asset.  A win-win for both of them?  Until just the past year or so, no big players were willing to enter this REO to Rental space, now too many of them are competing for the assets.

I'm in Atlanta, a hot market in all thier eyes.  My local investor clients are really seeing the effect of thier combined purchaing power.  I've tracked what my clients have tried to buy and lost out on, these players are paying way more than my clients are willing to pay as my clients demand higher returns than the 10% or so they will accept. I know local players who buy at the steps (foreclosure auctions), they are facing the same thing as I am with the listed properties.  The REO brokers are seeing fewer listings come their way as these 3rd parties buy them up at the steps, and many of the REO brokers are working with these funds furhter increasing the difficulity for my clients to buy.

"For homeowners who have been buffeted by the foreclosure process, the suggestion that they willingly hand over their deed to the lender and rent the home instead may only add insult to injury."

http://www.nytimes.com/2012/09/30/realestate/mortgages-the-rental-alternative-to-foreclosure.html?ref=realestate&_r=0

How is this a real market recovery?  We have such a shortage of inventory here in California with plenty of Buyer's but too few properties.  How is this helping the American Dream of homeownership?  It's a great plan for the lender to protect their assets by circumventing forceclosure filing fees, cash for keys, commissions, and the like.  I suspect the banks are anticipating an inflationary spiral (from all the printing of money) and they will just cash in on the value when prices go up in a couple years.

Maybe Wells Fargo, Bank of America, and Chase will all follow suit?  If they are so concerned about the homeowner, why don't they just extend the loan to a 50 year loan?  That makes more sense and protects homeownership.

This is not some sort of 'saving grace'. Think of this everyone - Carrington is going to rent back the borrowers own home at a 'manageable rent'. Why would someone rent at less than market rate? That doesn't make any sense.  They are making this out to be some sort of 'savior' program.  Granted the owners don't have to currently move but then when does Carrington finally make the new tenants pay market rent? If the owners financial situation does not change for the better, start foreclosure & sell the house to someone who can afford it.

The only reason they would need agents is to determine rents & then provide local paperwork if needed. Enforcement possibly also.

It make since from an accounting perspective. They can take a total expense and now show it as an asset with revenue. It also take it off the books as an REO and demonstrates that the foreclosure debacle is improving and getting under control. Guess who will take credit for that.

Good to know next time you're out there door knocking.  Short sale vs. foreclosure vs. eligibility for rental? The invitation letter may already be sitting on their kitchen table and other Realtors are not our only competition anymore.

With the new bulk sales to investors in which the properties must be held as rentals (for an unspecified period of time) seems to dissuade home ownership once again.  What depreciates the value of homes in a neighborhood more? Having a concentration of rental properties, or foreclosures?

Smoke and mirrors? Just sayin'...

"Advocates for distressed borrowers say that even those who do qualify ought to be cautious. It may be more financially beneficial to ride out the lengthy foreclosure process living in their houses free and putting money aside, rather than working out a deal to pay rent," said Craig D. Robins, a bankruptcy and foreclosure defense lawyer working in Nassau and Suffolk Counties. 

These homeowner's will not be getting a discount or break on rental rates to stay in their home - they just won't be paying as much as their monthly mortgage obligation was. 

Once again, if they are able to make payments, a 50 year loan would be a simple solution if it were just about reducing payments and keeping them in their home? This is one of the most obvious alternatives to benefit the homeowner, yet all the banks have avoided it entirely?