Cash for keys is where a homeowner is paid money to voluntary move out, usually after foreclosure. This is often a last resort for homeowners after a Deed in Lieu or Short Sale was denied. The money is generally paid by the mortgage holder or new owner after the foreclosure sale. Banks are under no obligation to offer you any money to leave and can proceed immediately to eviction after foreclosure. That being said there is no harm in asking your lender if cash for keys is a program they offer. Even if you are told no early in the process you should call back later as policies can change once your loan is transferred to a new department. If you are considering this option then it is almost always best to inquire early rather than wait, although some banks won’t even discuss “cash for keys” until after they know they are stuck with the property when nobody bids at the foreclosure sale.
How much money is paid in cash for keys?
There is no set minimum or maximum payout although the general range is $500-$5,000 depending on the lender. Usually the amount is based on the value of the home. A $500 offer may be for a house worth $100,000 or less whereas a $5,000 offer is usually reserved for houses worth $1 million or more. A typical $250,000 house may warrant an offer of $2,500 or more.
How do I qualify for cash for keys?
Typically the lender will require you to sign a written agreement to vacate by a certain date and also require you leave the house in good condition. The amount paid often varies based upon when you vacate. They may offer $3,000 if you vacate in 30 days, $2,000 if you vacate in 60 days, and $1,000 if you vacate in 90 days. The money is generally paid after you vacate and the lender inspects the property for damage.
Why do banks pay cash for keys?
What if an investor buys my house at the foreclosure sale?
Cash for keys was created to entice unhappy homeowners to voluntarily leave so the lender does not have to hire an attorney to start the eviction process that takes time and money. The other reason is to dissuade homeowners from taking out their anger and frustration with the foreclosure process by destroying the home before they leave. Please be aware that North Carolina and many other States make it criminal for the homeowner to damage property that is secured by a loan.
Generally speaking if you can receive $2,000 or more via “cash for keys” and that helps defray your relocation expenses then you should seriously consider the offer. You can also negotiate for more time to vacate and/or more money. The alternative of waiting for the Sheriff to show up to throw you out is not an appealing option for most, especially those with a family and household goods.
If you have signed a “cash for keys” agreement with your lender and a third party purchases your house at the foreclosure action then your agreement with your lender is likely terminated. It is important to read any “cash for keys” agreement in totality for any such clauses related to sale at foreclosure. Although any third party that purchases your home may offer you money to leave that often does not occur, or they offer much less than what the bank offered.
What if I refuse cash for keys?
You are under no obligation to accept any “cash for keys” offer. That being said, you need to understand after your house is sold and any upset bid period has expired you are on borrowed time. Either the bank or new owner will eventually start the eviction process.
Should I accept cash for keys?