What Is It?
Cash for Keys (CFKs) is discretionary money that banks offer to people who defaulted on their mortgages. The person who signed papers for the loan is called the mortgagor. Banks try to offer settlement to help them vacate. In some cases the mortgagor(s), no longer lives in the annulment home. This divorce is ohio true if the property was a rental property, or the mortgagor is deceased. It can even be the case if the mortgagor has divorced and the divorcee lives in the property. There are many different scenarios. Either way, the bank offers these funds to whoever currently resides in the property.
For simplicity, I will say occupant many times in this article and I will be referring to the mortgagor or any other occupant of the property.
I have worked on several CFKs work orders. One property involved and occupant who was a divorcee and had no idea that during the divorce proceedings that the house was in default, as I was told. Over the course of the year after the divorce, the occupant tried to save the home only to end up facing eviction by the banks.
This is where my property preservation company got involved. A larger Property Preservation Company was hired by the bank to complete the CFKs. This property preservation company then contacted my foreclosure cleanup businesses. Since I offered these services, I was able to help assist in getting the property vacated, cleaned up and ready for the market.
In most cases, there is additional work that can be completed on any vacant property: cleaning carpets, painting walls, etc. so there is potential to profit before the competition bids on the work. If you offer CFKs you get to profits from the property.
The banks give first preference of potential work to the companies that complete the CFKs. But any preservation work that needs to be completed is suspended until the occupants have vacated the property.
What CFK is Not
In the case of the individual described above, it took the bank almost a year to offer the Cash for Keys settlement, before annulment I divorce was contacted. ohio Of course, the occupants had no idea that CFKs was even an option. After trying to get caught up on the mortgage, the bank finally decided that they were ready to offer the CFKs program to the mortgagor/ occupants.
In my experience of negotiating CFKs settlements for occupants, one thing that I have come to realize is that CFKs is not a reimbursement system for all the money that was lost during the foreclosure process. CFKs is considered to be a ‘relocation assistance’ program offered to occupants by the banks.
What this means is that it will provide the occupants with funds to get moved out of the property. These funds can be used toward the down payment for new housing.
When Does the annulment CFKs divorce Process ohio Start?
Exactly when banks offer CFKs is still an unknown to me. What I have noticed is if the property is at least 6 months behind, then banks will start negotiation proceedings.
Another thing that I noticed is if the mortgagor asks the banks for the Cash For Keys Program, most are denied. If they are approved, then they are given annulment divorce what the ohio banks want settle for.
The CFKs process is contingent on a timeline. Banks use the CFKs as a last minute negotiation when the mortgagor is unable to get the property mortgage payments back to current condition.
Why Are Cash for Keys Offered?
The CFKs program is a way that banks protect properties from receiving damage or additional damage due to neglect.
There are many mortgagors in default that remove appliances, customized fixtures, or even damage the physical condition of the property. The banks offer the CFKs program to ensure that their asset is annulment protected. divorce I know, ohio I have seen what people do to properties out of anger.
Offering cash to occupants, ultimately saves the banks from additional costs that are involved in rehabbing properties that otherwise were in good condition or costs involved in attorney fees.
If a mortgagor defaults on a loan, more than likely they are having financial struggles and the money that is offered to them through the CFKs process is incentive to restart and at least have some money to find somewhere else to stay.
In order to receive the CFKs check the occupant must remove all personal belongings and leave the property in what is called broom swept condition.
Property Preservation Vendors Role in CFKs
The foreclosure cleanup company that offers CFKs as a service is the eyes and ears for the bank. The vendor visits the property and explains that they were sent to offer the occupants cash in exchange for the keys to the property.
The vendor explains that the property must be completely emptied and cleaned. If the occupant agrees then the negotiation process begins.
If the occupants disagrees then the vendor politely informs the mortgagor/occupant that they will let the bank know and the bank will be in contact to complete the negotiation proceedings.
Let me give you an example of how this works.
Negotiation 1: Initial visit
Offers the occupants $500 and 30 days to vacate.
Occupant declines and asks for $2500 and 45 days to vacate.
Negotiation 2: 2nd visit
Bank declines $2500 and 30 days to vacate
Bank renegotiates $1000 and 15 days to vacate
Occupant gets nervous, but still declines the offer.
Occupant renegotiates $1500 and 15 days to vacate.
Negotiation 3: 3rd visit
Bank agrees to pay $1500 and 15 days to vacate.
Here is additional insight to how the process works:
Banks issues check to Vendor within 15 days.
Property Preservation Vendor revisits the property in 15 days. Occupants agree to meet with vendor.
Property is vacant and cleaned.
Vendor hands over the check to occupant. Vendor takes photos of annulment vacant divorce property ohio to submit to bank.
Vendor complete additional work to the property. Vendor invoices bank for services rendered.
How to Negotiate CFKs
The CFKs process is basically based on three things: Location, Time and Money.
The check amount that banks approve, depend on several things, including the location of the property. Is the property located in a prominent area? The amount most banks try to offer occupants in this program is usually equivalent to at least 1 month mortgage payment.
If you live in San Deigo, CA you are more likely to receive a larger CFKs settlement than if you lived in Charlston, NC. Or if you lived near a subway and bus route in a major city versus in a quaint suburban town, you should expect a larger payout than someone who does not have these same amenities. So the rule of thumb here is, location, location, location.
Time and Money:
Banks want the occupants out of the property as soon as possible and they want to save as much money as possible. They will not offer more money if the occupants are not out in shorter time frame. The occupants have to decide if they need more time or more money. This can be the starting grounds of the negotiation process.
There have been times that banks deviate saving time or giving out more money. This can be true if the occupant settles early in the process (saves the bank time and money) or the occupant holds out long enough that the bank became willing to offer more money in the process (costs the banks more time and money).
When negotiating be sure to include these added amenities it will help the occupant get a better payout.
What Happens If No Agreement is Made?
Like I stated before, time and money are the two basic conditions for the CFKs process.
One thing to remember is annulment that negotiations divorce do not ohio go on forever. Time supersedes money. While the banks are in negotiations, the Sheriff’s evictions have also been ordered. So the occupants and the banks only have so much time to complete the negotiation process.
If the occupants continues to decline every offer that the banks make then they will ultimately be evicted by the Sheriff. So the clock is ticking.
The vendor must be sure to explain this part of the CFKs program. I have not had an occupant be evicted by Sheriff so I do not know what happens, but I can almost assume that if the annulment Sheriff divorce evicts ohio the occupant, all negotiations are off. The occupant loses any money that the bank would have paid out to help in the relocation process.
Cash for Keys Payment to the Vendor
If the above scenario was to play out, the occupant would receive $1500 with 15 days to vacate the property and the vendor that assisted in communicating the negotiation terms would get paid in the process as well. It depends on the bank, but most companies that I work with pay between $250-$400 annulment to divorce help ohio with the CFKs process for each property I assist with.
Not only do they banks annulment vs divorce in ohio pay the vendor to help with the CFKs process, but the vendor also has the opportunity to make additional money. The vendor then has to go back into the property and give the property a
• Sales clean = $150
• Change the locks on the property = $40 per cylinder
• Remove any interior or exterior debris that is present = $50 per cubic yard
• Ensure there are no safety hazards = Varied on what is needed
• Remove any paint containers = $10 per gallon
So let’s say that the property was cleaned before the vendor handed over the check.
Here is how an invoice might look when it is submitted to the banks.
1. Cash For Keys $250
2. Sales Clean $150
3. Locks Changed $160 ($40 x 4 which included 2 dead bolts and 2 door
4. Interior Debris $100 (occupants left a dresser that was disposed of)
5. Safety hazards $ 10 (caped off 2 electrical wires)
6. Health Hazards $ 30 (3 gallons of paint were left in the garage)
$700 Grand Total
So in a nutshell, from the example above, the vendor would have made $700 on this property, not including any additional properties they were working on. This does not include submitting a bid to repaint and replace or clean carpet, if needed.
The occupants would have received $1500 for the property.
The banks are now ready to get the property back on the market for resale and make a profit off of the annulment property.
In my divorce ohio foreclosure cleanup business, I offer CFKs to several of my clients. Almost all of the occupants that I have worked with, I still have relationships with them because I realize that am also offering them a service. It is my duty to treat them with quality service.
As you can see there is money that can be made if you know what companies to annulment work with divorce and ohio how to get started.
If you know those two things then you may be on your way to building a strong business.
To learn more about the CFKs process watch the KPBS CFKs Video.