Banks Becoming Landlords, What Should We Do Now?

As I go to shut my laptop down, I notice an article pop up on my screen titled "Bank of America Starts Foreclosure Rental Program".  This states that homeowners at risk of losing their homes to foreclosure will have the titles handed back over to the bank, at that point they become tenants of their current residence....Although very little info is being provided here, I foresee a huge impact this program will have on the average American's future.
With 'bad loans' being written off, and toxic assets will be converted into money making machines, Bank of America will have success here.  This pilot program will start small, but I think it will be expanded exponentially.

This graph was pulled straight from the federal reserve's site, highlighting the correlation between monetary rates and housing prices.....


With interest rates at their all-time lows, there is only one way they can go; UP.  This being said, the rise of interest rates translates to:
1)Loans being even harder to get (since its near impossible to get one now)
2)Loans costing borrowers more (having even a 4% mortgage rate is still a drag, imagine have rates near 20% like in the past....)
3)Housing prices plummeting so current home-owners will either be upside down on their loans or will never be able to afford to purchase property, driving down demand.

I sense Bank of America will set the standard for the 8000+ banks in the US in becoming new owners of rental businesses.  All of the factors above will come together, to make it an easy decision for homeowners to just 'walk away' from their loans and become tenants.  Next thing you know purchasable homes are nowhere to be found, rent artificially being increased across the country, and everyone is miserable.

Maybe I am taking this article the wrong way or just over-thinking the possibilities.  But if the situation above happens, what should we do next?

1)Sell our homes now, pocket the equity, rent for a bit, then throw down cash when the prices of homes plummet?
2) Buy a house now while rates are low, and accept the fact that your future purchase will decrease in value?
3)Invest in Bank of America 'BAC' (or other banks)?
4)Pray the pilot program fails?

I would like to know what my readers think, please email me or comment, thanks.