Foreclosure rates are sweeping the U.S. faster than an outbreak of the swine flu. According to recent statistics, nearly five million homeowners are currently over three months past due on their mortgage payments, unfortunately making them prime candidates for foreclosure. Fortunately homeowners who are going through the foreclosure process who qualify have a government program called “Cash for Keys” to help with the transition.

The Cash for Keys program is a solution offered by many bank lenders that involves them paying homeowners who are being evicted cash in exchange for the keys. The cash is either a set amount or a percentage of the appraised home value. There are certain important parameters that have to be met in order to receive this 2009 introduced program.

Homeowners have to contractually agree and sign a contract stating that they will leave the home in good condition and not damage, vandalize, or remove staple items such as appliances. This is a huge part of the program because some people who are being evicted feel resentful and out of spite will intentionally damage or stop maintaining their house. This would require banks to put more money into repairs to turn the home around to sell, so they are more motivated to offer this opportunity in order to best protect their investment.

The Cash for Keys program can also be of benefit to renters when a homeowner forecloses on a house that they are renting. It’s unfair for renters to be caught in the middle of a foreclosure process that they did not have a part of. Some banks offer renters cash for keys option to compensate the renters for their trouble, avoid legal ramifications, and to help with moving expenses.

Once the homeowner or renter accepts the agreement the home is now property of the banks, and tenants have to be out of the home by a set date. Sometimes owners can negotiate the cash settlement if they feel it’s an unfair offer. There’s no guarantee the bank will except, but often they’re so anxious to get the homeowner out that they may be willing to bargain.

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This is filed under Foreclosures.

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