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Foreclosure and the CASH FOR KEYS Incentive

May 16, 2019

If, after making efforts to save your house, it appears inevitable that you may lose it to foreclosure, you should be prepared to pay the costs associated with moving and renting a new home. Accordingly, you should begin saving money to cover this expense including the amount you will need for the security deposit and first month's rent on a new home. If you are facing this situation and your finances are especially tight, you should know that your lender's "cash-for-keys" program may provide funds to help you out. To take advantage of this program, it helps to understand your lender's perspective and to know the basics on how to work with them.

After a Trustee Sale Auction (with no bidders), the lender will become the new owner of the property and the homeowner becomes a tenant whom the lender may need to evict. The lender's cost of eviction may include legal fees (for an unlawful detainer action), extra carrying-costs for lost time in listing the property for sale, and the potential expense of having to repair damage done by disgruntled homeowners. Many lenders opt to avoid the eviction process by offering "cash-for-keys," an monetary incentive payable to the occupant upon timely exit of the premises, and under the pretense that the home is left in "broom-swept" condition.

Typically, after the lender acquires the home through the trustee sale, a real estate agent (hired by the lender to list the home for sale) will visit the property and inquire as to when you intend to vacate. Unless you have already made an arrangement with the lender, it is the perfect time to inform the agent that you do not have the money to pack-up and move. Let the agent know that you've heard about lenders assisting with relocation, and that you'd be willing to vacate by a specified date (15 - 45 days is common) in exchange for money towards your move. The agent will have to get approval from the lender, but responses come relatively quickly.​

Although your particular lender's guidelines may vary, it is not unusual for the new owner (or bank which now owns the property) to pay as much as $5,000 for the occupant to vacate a home valued in the $300,000 to $500,000 range. Generally, the dollar figure offered by your lender will be influenced by length of your stay and the value of the home. In other words, the lender may be willing to pay you a greater amount when the move-out date is sooner than later; also lenders will typically offer higher amounts for properties they appraise at higher values compared with lowered valued homes.​

For help, contact the Law Offices of Darren J. DiMarco.Call (760) 496-1990 for San Diego County & (949) 288-6526 for Orange County. Or, you can email us at: