Banks exchange cash for keys to get people out of foreclosed property
| Friday, Mar 13 2009 06:26 PM
Last Updated Friday, Mar 27 2009 11:54 AM
Other options
In addition to cash for keys, lender Fannie Mae allows qualifying tenants in its homes — single-family, condos and manufactured housing — to rent them on a month-to-month basis.
The policy applies only to renters occupying the home when it’s foreclosed. Renters are charged market rate rent under the new lease. Homes are marketed for sale and may have needed repairs while the renters there. For more information, call 800-732-6643.
Freddie Mac has a comparable program for renters. Its number is 800-373-3343.
Images
Local real estate broker Warren Ash prepares to leave a card on a foreclosed home in the 5500 block of Appletree Lane.
Local real estate broker Warren Ash approaches the tenant of a foreclosed home in the 5500 block of Appletree Lane to make him an offer to move out.
Realtor Warren Ash spends most of his time these days doing the bank’s bidding.
He’s among a group of real estate professionals who work on behalf of banks and interact with occupants — former owners or present renters — on foreclosed properties.
They check on homes and report back to banks, letting them know if the dwellings are empty. They swing by the properties multiple times, leaving business cards and notices in doors.
If occupied, Realtors can make a “cash for keys offer,” with the bank or loan servicing company determining the amount.
When the offer process starts, so too do the steps that lead to eviction.
Occupants who aren’t cooperative with those trying to make cash-for-keys offers can land in court.
The idea is to get the occupants out of the home. The offers are intended to help tenants with some of their moving costs, not serve as relocation packages.
Banks aren’t interested in being landlords. They typically want to have their assets vacated, fixed up and listed for purchase.
From February 2008 to February 2009, 8,552 properties, mainly single-family homes in the metro Bakersfield area, foreclosed, county records show.
It’s unknown how many cash-for-keys offers materialized during that time.
But, for example, Countrywide Financial anticipates paying more than $70 million to more than 35,000 borrowers in participating states.
Countrywide borrowers in California in foreclosure who agree to voluntarily leave their homes will receive a cash payment to ease their transition to a new residence, according to the company.
A spokesman for Chase said cash-for-keys offers benefit the bank.
“The idea is when they leave, they won’t destroy the place. It’s a win-win for everyone,” Gary Kishner said.
INSPECTING PROPERTIES
On a recent day, Ash went to four homes in Bakersfield, mainly in the southwest.
A notice taped to the door of a condo on Nordic Drive, near West High School, stated $129,423 was owed on the loan.
“Welcome to a foreclosure,” Ash said from the living room of the two-story, vacant unit. “It’s not in too bad of shape.”
Dead roaches rested on newish-looking beige carpet. The stove was gone; a bottle of cypress rose-scented fragrance diffuser sat on the kitchen counter.
Ash, a broker with Bakersfield Realty Group, estimated he would have the condo listed in a few weeks.
Once a foreclosed property is vacant, damages are assessed — photos are taken and shown to the bank. Someone decides whether to authorize repairs.
“Our fiduciary responsibility is to the seller,” Ash said. “Everybody calls it ‘the bank.’ They think of it as a brick-and-mortar building.”
To Ash, though, it’s more than that. Homeowners make a promise to pay back the money they borrowed.
“It comes down to shareholders, the stock market, taxpayers. There’s people behind this,” he said.
Not every foreclosed home is trashed. Ash recalls a Bear Valley residence where the occupants shampooed the carpets before they left. It looked like an empty model home.
When properties are ready to be brought back to the market, appraisals are made and agents list them. Once the homes sell, they receive their commissions.
The modest house between Stine and Wilson roads that renter Steve Nelson lives in belongs to a bank. The burly electrician told Ash he’s working with people to prevent the foreclosure.
“He’s getting bad information,” Ash said after a terse conversation in the home’s driveway. Real estate records show it’s already foreclosed.
Beverly Huggins, the home’s former owner, didn’t return a message seeking comment. Husband Eric Huggins said Nelson’s actions contributed to the house being foreclosed.
GETTING AN OFFER
Marilou Ward, a Realtor with Remax Golden Empire, has dealt with occupants who have accused her of trying to rip them off.
Some renters are surprised to see her because they don’t know the home is in foreclosure.
“If someone comes to their home, a Realtor trying to negotiate cash for keys, it’s in their best interest to do that immediately.
Not to ignore us, blow us off,” Ward said. “The clock’s ticking with the banks and, as the amount of time increases, the dollar amount of the offer will decrease.”
To receive money from the bank, occupants must hand over keys and garage door openers.
They must leave the place in “broom-swept condition,” Ward said. Personal property and debris have to be removed from the interior and yard. All fixtures — toilets, countertops, ceiling fans — must remain. Landscaping, too.
“I’ve had people dig up all the trees and plants. They figure they paid for it,” she said. “But it is a fixture once it’s planted.”
Bakersfield Realtor Eydie Gibson, with Watson Touchstone ERA, said she’s encountered renters who claim they didn’t know the home was in foreclosure. The good news, she tells them, is Bakersfield has many good homes for rent.
To protect themselves, Gibson recommends renters go to the county’s Hall of Records to check if notices of default, the first step in foreclosure, are filed against potential landlords.
“You need to be sure that your landlord is credit-worthy so you don’t have to move in a few months,” she said.
