Cash for Keys: New Program For Struggling Home Owners

New hope for homeowner under the new Foreclosure Alternative Program (FAP) announced last month by the Obama Administration, permits troubled borrowers to deed their home back to the bank and walk away with a small amount of cash – commonly known as “cash for keys”.

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 andeeallen@gmail.com or on her website at www.strategicmediacoach.com.

Comments

Submitted by Anonymous (not verified) on
i need help with my eviction and have no money to vacate my lease option to buy has been voided

Submitted by Anonymous (not verified) on
I was offered a cash for keys, I'd already vacated the home and was declined a deed in lieu so when I was offered cash for keys I was all over it. After I'd given back the keys and met their requirements they declined the cash for keys because I'd already vacated the property. Pretty dirty deal if you ask me! I had the feeling they were going to give me the run around from the very beginning but did everything they requested of me.

Submitted by Anonymous (not verified) on
I am trying cash for keys now and I made the same mistake (vacating) you did. I was too affraid of being homeless after my hubby died. If you have any pointers for me...PLEASE LET ME KNOW. THANKS!

Submitted by Anonymous (not verified) on
I am trying cash for keys now and I made the same mistake (vacating) you did. I was too affraid of being homeless after my hubby died. If you have any pointers for me...PLEASE LET ME KNOW. THANKS!

Submitted by Anonymous (not verified) on
The same thing happened to me. They told me because they didn't have to evict me that I no longer qualify for the Cash for Keys program. Bunch of bullcrap if you ask me!