The Facts behind “Cash for Keys”

by Peter Vernon on General

The idea of "Cash for Keys" makes it easy for banks to take back a foreclosed home from its occupants, and in good condition nonetheless. Oftentimes, it is a problem for banks and that is why nowadays, they have made such policy an SOP.

Getting Familiar with "Cash for Keys"

"Cash for Keys" gives cash to owners or tenants of homes in foreclosure in return of vacating the house and surrendering its keys. The agreement between the bank and occupants of the foreclosed property makes sure that it will be cleaned and left in good condition. Included also in the agreement are the date when the home has to be vacated and the occupants' promise of:

  • Not vandalizing the home to be foreclosed
  • Not stripping copper, appliances, and light fixtures of the foreclosure
  • Not leaving foreclosure pets behind.

Knowing Why Banks Make such Payments

Banks may not be in the business of owning properties but once they take hold of the title of a foreclosed property, it holds them responsible for it. Meaning, if it would cost the bank lots of money to repair damages caused by the occupants, then it would mean an increase in the bank's loss.

Sometimes, it is also costly and time consuming to get rid of a homeowner or tenant from a foreclosed home.

The Costs the Banks Pay in "Cash for Keys"

The total cost is negotiable. Banks do not usually offer "cash for keys" automatically, unless the occupant approaches them first. Moving out incur these expenses expected to get recovered:

  • Movers
  • Rental truck
  • Security deposit plus first or last month's rent
  • Utility deposits
  • Temporary living quarters (example: motel)

Sometimes, banks pay a bonus to those who agree to immediately move out. However, extorting the bank can cause withdrawal of the offer. Occupants of foreclosed houses are given "Cash for Keys" for as long as they are courteous and pleasant.

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