The Cash for Keys Program is an extension of the deed-in-lieu of foreclosure concept. Deed-in-lieu programs are not new, but the FHA giving the homeowner money to move is a new twist on the concept. Borrowers with FHA loans that receive a deed-in-lieu or cash for keys do not have to repay their mortgage.
Under the program, the lender offers the homeowner a cash settlement (usually around $2,000) and in exchange the homeowner agrees to vacate the foreclosed home. The homeowner then signs the deed over to the lender and the lender then cancels the amount owed on the mortgage. Lenders have also begun to extend these same offers to individuals renting homes that are being foreclosed. The lenders benefit because they do not have to go through the expensive eviction and foreclosure processes, they get the homeowner out of the foreclosed home, and the home is usually left in much better condition than if the homeowner had been evicted. The homeowner receives the benefit of receiving money to move and having the amount owed on their mortgage forgiven in exchange for the deed.
To qualify a homeowner must:
-Be facing long-term financial hardship;
-The house must be on the market for at least 90 days for a reasonable price;
-Face no additional liens or claims except for the first mortgage; and
-Leave the property clean and in good condition.
