Banks to do Buy Backs?

There's a couple of great ideas floating around: (1) allow homeowners to remain in & lease their home after foreclosure, and (2) offer a buy back in which the homeowner could purchase the home after a specific term (3 years? 5 years?)

Buy backs are not a new idea, buy backs have been around for years including during the boom. Back in the boom-time, investors saved many homeowners from foreclosure by purchasing the property, renting it back to the homeowner with an option to buy it back. One notable difference is that back then, these investors were often referred to as scam artists as they were blamed for taking advantage of distressed homeowners.

The St. Petersburg Times ran a good article House: Let Foreclosed Homeowners Rent on August 15, 2009. The article offers a nice snapshot of the pros and cons of buy backs.

The idea is great, but as most homeowners and agents would agree, not if banks run the program. Currently I am working a seamless short sale. The key is disclosure otherwise the buy back could be deemed not to be an arm's length transaction and possibly considered fraud. Some banks will not approve a short sale that includes the homeowner remaining in the property - buy back option or not.

A buy back program has the potential for huge success and win-win opportunities for all parties....again, as long as the banks don't run it.