The Federal Alternative Program is part of the Obama Administrations Making Homes Affordable program which includes refinancing and loan modifications.
The “cash for keys” program is technically known as a deed-in-lieu which allows the bank to take a property back from a delinquent homeowner who can no longer afford to make their house payment. To take advantage of the Foreclosure Alternative Program, the home owner must not qualify for a mortgage modification or a short sale.
The ‘target’ audience would be people who are unemployed, upside down on their home values, or going through a critical event such as divorce, death, future job loss, etc.
How a “cash for keys” or deed-in-lieu program works is the bank pays the homeowner an incentive (usually $1,000 to $5,000)to move out of the home on a specific date and leave the home in good condition. In doing so, the bank agrees not to charge the homeowner back for the difference in what it eventually sells for and what they owe.
A second mortgage or other debt on the home can cause a lender not to offer “cash for keys”. The owner of the second mortgage or debt must agree to give up all their interest in the property. Under the Federal Alternative Program, the second mortgage holder may also receive up to $1,000 when they waive their rights.
“Cash for keys” or a deed-in-lieu may be the easiest way for troubled home owners to get out of their homes quickly with minimal repercussion. They can use the “cash for keys” money to move all their belongings plus walk away without any additional financial stress or responsibility.
Mortgage holders also benefit from “cash for keys” program. They avoid the hassles, costs and drawn-out time frames of the foreclosure process while getting the properties back quicker and in better condition.
“Cash for keys” may be one situation where it is a win-win situation for both the mortgage lenders and the homeowners.
Written by Andee Allen. She is freelance writer, Strategic Media Coach/Consultant, Real Estate Investor, and California Realtor (License #01854926). You are welcome to contact Andee at firstname.lastname@example.org or on her website at www.strategicmediacoach.com.