Foreclosure sales

Foreclosure sales create an interesting problem when homeowners remain in the home throughout the foreclosure process. Many homeowners fear that they will come home and find the locks changed, with all of their belongings on the curb. However, there is a lot that has to happen before that can happen.

Once the foreclosure sale takes place, there is a new homeowner. Whoever purchases the house at the sale, usually the bank, owns the property at that point. State laws prohibit the new owner from entering the premises and forcibly removing the occupying previous homeowners. They are the same eviction laws that require landlords undergo a legal process to eject tenants upon lease expiration or non-payment.

So, how does the mortgage company avoid going through the formal eviction process? CASH FOR KEYS! The mortgage company pays the homeowner to just leave. Usually there are some requirements about the condition of the property, such as it must be left in a “broom-swept” condition. However, after undertaking a very lengthy and expensive foreclosure proceeding, the last thing that the bank wants to do is hire another attorney to go into a different court and file an eviction action. They’d rather throw some or all of that money at the homeowner.

It’s a win-win, right? The mortgage company gets a property that is in better shape than it otherwise would have been without having to spend any additional money, and the previous homeowner gets moving expenses.

Here’s where an attorney can help. Some banks readily offer this program to the individuals continuing to reside in the home. Others need to be persuaded, and attorneys can be persuasive. Furthermore, most attorneys are familiar with how much a particular bank is willing to pay in that neighborhood. So, the bank may only offer you $1,200, but the attorney knows that the bank is willing to pay $4,000 since that is what that same bank paid another of her clients less than a mile away. Similarly, lawyers are more familiar than the average homeowner with the cost of eviction proceedings. Remember, that’s why the bank is paying anything at all: to avoid the cost of another court proceeding. So, the attorney is in a better position to argue how much the bank will be saving by avoiding eviction.

How are the attorneys paid for this service? (1) Percentage: some attorneys take a percentage of what the banks pay. (2) Flat fee: other attorneys ask the residents what they need, and the attorney keeps whatever else they can get from the bank.

Retaining an attorney to oversee the Cash for Keys transaction helps ensure a smoother interaction with the banks and can often get residents more money from the bank to start their new life.