(WXYZ) You’ve heard of Cash for Clunkers; now there’s Cash for Keys.
With hundreds of people in Michigan facing foreclosure every month, this is a new way for you to get some cash, even if you’re losing your home.
If you are losing your home, there are some new things that lenders are trying to do to help you move out with dignity, and keep the property in decent shape.
Water damage that warps floors beyond repair; stained carpeting; hanging wires; and garbage left everywhere. All too often, this is how homes are left after foreclosure and eviction.
Sometimes the former owners are furious with the bank so they destroy the property. Sometimes it’s just embarrassment that forces families to leave quietly, without doing things like turning off the water, which could result in thousands of dollars in damage.
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Marshall Mandell - Re/Max Realtor] “Plumbing can be taken, fixtures can be taken, appliances can be taken. It’s not unusual to see holes in the wall, graffiti all over the place ”
That’s why some lenders are now giving cash in exchange for leaving the foreclosed home clean.
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Marshall Mandell - Re/Max Realtor] “We’re not looking for the home to be improved, they don’t need to paint, they don’t need to necessarily clean the carpet, but we just don’t want the home destroyed.”
Re/Max Foreclosure Specialist Marshall Mandell sells foreclosed properties for the lenders, and he’s the one who often will approach families about the new Cash for Keys program.
Here’s how it works:
If you can’t pay your mortgage and you end up in foreclosure, in Michigan you have six months to redeem, or get your house back.
During that time, you are entitled to live in your home rent-free. If you can pay what you owe, you keep the home. But most people can’t do that.
Once you’re out of the redemption period, the lender will have to evict you. And that’s where Cash for Keys comes in. Instead of spending thousands of dollars on evictions, some lenders have started offering borrowers anywhere from $500 to $5,000.
In exchange, you agree to leave the house quickly, and you leave it looking in what’s called "broom-clean" condition.
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Marshall Mandell-Re/Max Realtor] “All the trash has to be removed, from the attic, from the garage, and the bank gets a clean home. In return, people get to move with some money under their belt.”
Mandell says you can not take most appliances and light fixtures, but usual home wear and tear -- like smudges on the walls -- don’t matter.
[
Marshall Mandell-Re/Max Realtor] “So here’s an upstairs bedroom, and you’ll see there’s some carpet stains down here on the floor. But this is OK. If the homeowner doesn’t have time to clean anything like this, it’s fine. The point is, there’s not trash, there’s no debris.”
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David Trott - Trott & Trott] “I think it’s a win for the borrower, it’s a win for the lender, it’s a win for the community, because it’s a property that’s going through a transition without the blight of an eviction.”
David Trott is the managing partner of Farmington Hills-based Trott & Trott, which represents lenders in handling thousands of foreclosure cases every month. Trott says about 10 percent of the time, borrowers are taking advantage of Cash for Keys programs.
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David Trott - Trott & Trott] “Being able to coordinate with the lender to vacate on mutually agreeable terms, I think, gives them peace of mind that they’re not just walking away from the property in the midst of a bad eviction, where the Sheriff’s putting stuff on the curb.”
Cash for Keys isn’t your only option, either.
If you know you’re not going to be able to pay the mortgage, some lenders are open to something called Deed In Lieu. Essentially, you hand over the deed of your home before the foreclosure process, in exchange for money for relocation. The upside is your credit score won’t take the possible 150 point hit that a foreclosure will bring. But keep in mind that if you’ve been missing payments, your score is already suffering.
The other choice is Cash for Redemption. During the six month waiting period, you give up your redemption rights in exchange for cash to leave right away.
And there’s another last-ditch option that’s worth a shot. If you’re in foreclosure, you can ask the lender to do something called "produce the note." If your mortgage has been re-sold several times, some banks can’t actually find the original note. Until they do, you can stay in the home.
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Rod Dunlap - Real Estate Attorney] “If they can’t provide that proof, ultimately there is no foreclosure.”
Make sure you consult an attorney before you participate in any of these programs, and definitely get everything in writing.
Here are some more tips that can help you deal with foreclosure:
http://www.fightmortgageforeclosure.com/Click here for more information on how to use the “produce the note” tactic.
