Cash for Keys program could prevent foreclosures
In the ongoing efforts to decrease the number of foreclosures in Georgia and throughout the country, government officials and mortgage lenders are working together to implement a program that could offer relief for millions of distressed homeowners. The program, titled “Cash for Keys”, would allow homeowners in danger of foreclosure the option of simply giving their home back to the bank and walking away.
Under the program, homeowners who are more than three months behind on mortgage payments would be eligible to receive up to $21,000 in exchange for leaving their home quickly and with no damage. Of that amount, $1,000 would be earmarked for financial counseling, and $20,000 would be used by the homeowner to secure his or her next living situation and to start over.
Recent government reports indicate that approximately 4.8 million homeowners are currently at least 90 days behind in mortgage payments. Foreclosures already in progress have backed up the legal system in many states. This overburdened court process is yet another reason that the government is seeking alternatives.
Some mortgage lenders and industry insiders are strongly opposed to the “Cash for Keys” program, wondering why delinquent homeowners should be rewarded for failing to keep up with mortgage payments. The government has countered these objections, stating that the program will also save the lenders money by preventing damage to homes and making them easier to sell, in addition to easing the burden on the court system and benefitting financially strapped homeowners.
In addition, in several cases homeowners are not fully responsible for their mortgage issues. Predatory lending and the “robo-signing” scandal have both contributed to the continuing onslaught of foreclosures, so government officials believe that banks should help out struggling homeowners.
Source: San Francisco Chronicle, “Can’t pay the mortgage? Maybe the bank will pay you to leave”, Anna Marie Hibble, 3 May 2011