Monday, August 10, 2015

What is Cash for Keys?

If foreclosure is imminent, and you have worked with your lender to find a solution to your mortgage default that reinstated the mortgage and were unable to find such a solution that allowed you to keep your home and are considering a short sale or a deed in lieu of foreclosure, some lenders are willing to offer “Cash for Keys,” whereby the lender will actually pay you to vacate the home in a timely fashion. The money you receive in exchange is intended to pay for your relocation costs.

The reason mortgage companies are willing to do this that it is their best interest to forego the cost and time involved in carrying out a foreclosure. When the mortgage company agrees to give you cash to move out on a mutually agreed upon date, you agree to maintain the property and leave it in a “broom sweep clean” condition. Often the cash is paid upon or after exiting the property.

Mortgage companies do not have to do this and probably want even tell you about it unless you ask. If you trash the place, leave food to rot in the refrigerator or steal the appliances or are not out on the agreed date, you won't get the money. 

If you are eligible for the government Home Affordable Modification Program (HAMP), but are denied a loan modification or can not avoid losing the home, then you may qualify for the Home Affordable Foreclosure Alternatives (HAFA) program. HAFA options are the short sale, and the deed in lieu.  Short sale transactions are complex, involving coordination and cooperation among a number of various parties. Fortunately, the HAFA program simplifies and streamlines the process. If you do not cooperate in making the short sale happen, you won't get cash for keys. When you close, HAFA may provide $10,000 in relocation assistance but typically provides between $1,000 and $3,000.

FHA cash for keys may provide up to $3,000.  There is a limit on how much other cash one may have. If one has over $5,000 in cash at the time of the move out, the amount of money you get from cash for keys is reduced.

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