Borrowers will not be able to apply for the program, rather it is through "invitation" only, and the pilot will be less than 1,000 customers. It will be tested in Arizona, Nevada, and New York.

"Pilot participants will transfer title to their properties to the bank and have their outstanding mortgage debt forgiven. In exchange, they may lease their home for up to three years at or below the current market rental rate," according to a statement. The rent will be less than the mortgage payment and the (former) homeowner will have no financial obligations to the property, like taxes and insurance.

Bank of America will work through property management companies to handle the pilot. This announcement comes just after FHFA, the regulator of Fannie Mae and Freddie Mac, last month launched a pilot program for investors to buy Fannie Mae properties in bulk, as long as they rent them for a number of years.

A Bank of America spokesman tells CNBC, "We'll own the properties only in the pilot and only initially. If a decision is made to roll out a full program, Bank of America would not be in the ownership position at all."

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