FHA to Pay $2,000 for Cash for Keys Program
Posted by Benjamin Dona on Wednesday, October 14th, 2009 at 10:33pm.
The Federal Housing Administration (FHA) announced yesterday they are adopting a new Cash for Keys program whereby lenders will pay borrowers with FHA-backed loans $2,000 for agreeing to turn their property over to the lender by using a deed-in-lieu of foreclosure. By applying for and getting an approved deed-in-lieu under this program, borrowers will be released from their obligation to repay the mortgage and may also have their deficiency judgment waived too.
To qualify for the program, borrowers must be facing long-term financial hardship, had their house on the market at a fair price for at least 90 days, and not have any other additional claims or liens (other than the first FHA mortgage) outstanding against the house. In addition, the borrower must vacate the property and leave it in broom clean condition.
Since the possibility may still exist for owing the lender a deficiency judgment, and the potential for having tax consequences under a deed-in-lieu, borrowers applying for this program should seek the advice of tax consultant or a real estate attorney to make sure they understand the process and know their rights and responsibilities.
And so, once again, the foreclosure beat goes on.
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