Stuck as a third wheel at catch-up lunch with my wife and her friend this weekend, my ears pricked up when the friend dropped a tantalizing bit of foreclosure trivia — when it finally comes time to kick you out, banks will hand over a ton of money to bribe you into not vandalizing the place.
In a policy dubbed Cash for Keys, banks cut the former homeowner hefty checks to insure the house is reasonably clean, not stripped of its copper wiring, nor left filled with abandoned pets.
Banks use Cash for Keys because it makes business sense, About.com says:
Although banks are not in the business of owning property, once they get title to the home through foreclosure proceedings, the bank is now responsible for the home. If the bank has to spend a ton of money to repair damage caused by the occupants, that money increases the bank’s loss.
It can also cost thousands of dollars to evict a homeowner or tenant. It’s also time consuming to go to court.
My wife’s friend, who stopped paying her mortgage December of last year, gets to remain in the house for free until late September, when she’ll get $2,000 in Cash for Keys. Sure, her credit will be ruined, but she already had awful credit before she was approved for a liar loan she didn’t deserve and had no chance of keeping current. Given her irresponsibility (she didn’t lose her job or anything — just decided she’d rather not pay her bills) and opportunity, she made the smart play.
Cash for Keys: Why Banks Pay Homeowners to Move Out [About.com]