What is Cash for Keys?
I receive a lot of phone calls now asking what is Cash for Keys and how do I go about finding out how to apply for Cash for Keys? With the recent increase in foreclosure auctions of homes that have long since defaulted on their mortgages and have languished in the court system; this question will become more common, especially as homeowners turn into occupants/tenants of bank owned properties.
The Foreclosure Numbers as of October 2015
Cash for keys is when the bank purchases a home back in a foreclosure auction and then offers the former homeowner money to vacate the home within a certain time frame. If an individual purchases a home at auction, instead of a lender or bank, they too may offer the former homeowner(s) Cash for Keys. Please note however, many individuals who purchase foreclosed homes are usually more intent on using the legal system to evict a former homeowner.
Cash for keys is not to be confused with a Deed in Lieu. A Deed in Lieu of foreclosure is a process by which the bank offers you money to vacate the home prior to a foreclosure action or foreclosure auction in return for you turning the deed to your home over to them. This must be done in a specified period of time and the home would have to be in a certain physical condition to be considered. In addition, usually there can only be one mortgage on the home and the property cannot be subject to any other liens or encumbrances upon title.
Why would I want to participate in Cash for Keys?
The answer to this question is quite simple. This is an opportunity for you to receive some cash to help you relocate. It is a lot better to leave the home on your own terms as opposed to having a sheriff come and evict you and your belongings. While it could take some time for a bank to evict you, it is usually better to be in control of the situation. Most homeowners have gone through years of stress attempting to navigate the foreclosure action. To have to further endure the anxiety regarding when they will be evicted is a situation that should best be avoided. Cash for keys would surely help.
How do I get Cash for Keys?
In many instances after a foreclosure auction a local real estate broker will try to contact you. They may come to the home and/or leave a notice on your door asking that you contact them. You should call them and if they do not offer you money to leave the home request it from them. The amount of money seems to average around $3,500, although I have seen much more offered. The reason the banks offer this money is that it is usually easier and less costly than doing an eviction. Furthermore, it may assist them in the protection of their asset, the home. Additionally, in eviction proceedings should the lender find themselves in battle with a former homeowner that knows how to “play the system”, the eviction could take a considerable amount of time.
I have spoken to some brokers of REO (real estate owned) properties that have told me in some instances it has taken years to evict someone. But please note, in most cases it generally takes only a few months to have the occupant evicted.
As a matter of course during the Cash for Keys process, the bank will have the home inspected by an authorized representative of the lender prior to the homeowner leaving. In most cases the bank will require that the home be in a certain condition before you leave. Once the inspection report comes back to the servicer as satisfactory, they will authorize that the negotiated amount of money be paid to you. This means the home must be cleared of all debris and belongings and broom swept. If there is significant damage, the lender may require that it to be fixed.
Your Options When in Foreclosure
Going through foreclosure is a grueling process for all. It is important to know that options still are available even after the bank has taken back possession of the home. And although the real estate market in the New York area is improving, or in some towns has recovered, the cloud of distressed homes still looms over head with foreclosure starts still on the rise.
I have been working with homeowners who are in foreclosure and face these types of situations for over 8 years and understand the stress of going through this process. Feel free to contact me with any questions or concerns you may have.