"Cash for Keys" is an opportunity offered by many mortgage foreclosure companies for the homeowners who are being evicted after a foreclosure. It involves the mortgage companies giving money to the homeowner in return for the keys and the home turned over in good condition. This program helps the homeowner by giving them a little extra cash to move and the mortgage company by receiving the home in better condition. The program helps minimize some people's need to vandalize the homes during an eviction.
Generally, the amount offered is a set amount that is higher if the homeowner moves quickly and is reduced if the move takes longer. Regardless, the homeowner will be required to be out of the home by a certain date. To get Cash for Keys from a mortgage foreclosure company the homeowner must abide by certain terms.
Expect a third party (Servicer) such as an inspector or a real estate agent to contact you about the offer. The contact may be in person, but normally you will come home to a note on your door asking you to call.
Set up a meeting with the Servicer so they can explain the "Cash for Keys" offer. If an agreement is made, the homeowner will sign paperwork saying they understand the terms and are willing to fulfill certain requirements to get the cash.
Ask the Servicer to negotiate a higher cash offer. Some companies will be able to negotiate while others will have strict policies. The foreclosure company can withdraw the offer if they feel the homeowner is trying to be unreasonable in negotiations. In the end, you will be evicted with or without cash in your hands. A little constraint during this emotional time may benefit you and your family.
Understand that each mortgage foreclosure company may have different conditions. However, they generally all require these terms. The homeowner must leave a key to the property. The home must be left in "Broom Swept" condition, which means a clean home down to the sweeping. Only normal wear and tear will be acceptable with no signs of vandalism from the homeowner. All built-in appliances and fixtures must be left in the home. There can be no pets left behind or junk in the yard or out buildings.
Move out by the agreed date and wait for the Servicer to have the home inspected. They must determine that the homeowner has complied with their agreement on the condition of the property. If the inspection shows the home was not trashed out, cleaned and left in tact, the homeowner will not receive the cash. Make sure you understand the terms and what the inspector will be looking for.
Once the foreclosed home has passed inspection the homeowner will receive the agreed upon funds. The Servicer may issue a check at the time of the inspection or the homeowner may have agreed to wait 3-6 weeks for the mortgage foreclosure company to pay them direct. If the Servicer pays you directly, it will probably be on their business check and they have agreed to be reimbursed at a later date. This all depends on the mortgage company you are dealing with and the agreed upon terms.
Ask about the "Cash for Keys" program if the Servicer does not mention it when they contact you. Not all mortgage foreclosure companies will offer this program. Some will offer it, but only if the homeowner asks.
However, it is becoming more common so if possible take advantage of this program to help your family in these tough times.
This is an option if you decide to do nothing and not attempt to work with your lender to modify or otherwise cure the defaulted loan.
Roger W. Herrick
California Real Estate Broker
949-365-6585
California Real Estate Broker
949-365-6585
