Bank of America is considering a programme that will give a nine-month break to jobless borrowers who struggle to pay their home loan obligations, with a condition that if they fail to find a job within the nine-month period, they will have to sign their house over to the bank.
The bank will also give customers at least $2,000 to help with moving expenses.
Customers who avail the programme will have their monthly mortgage payment reduced to zero over the course of nine months, until they are able to pay, or not when the nine months are up, they will have to sign over their house.
Several experts said that the plan could become an industrial model and would be the most substantial and creative approach in addressing soaring unemployment rates, which is driving mortgage foreclosures and delinquencies.
The programme could also provide many families with faster relief, allowing them to save money and provide a timetable for making decisions. Bank of America could also avoid millions in collection and foreclosure expenses.
"It’s an innovative way for Bank of America to demonstrate it’s working with its customers," said Mark Williams, a former bank examiner at the Federal Reserve. "Regulators should view this as a positive step as well."