By Andrew J Thompson, attorney
What does “cash for keys” mean? In essense, it’s a shorthand reference for a deed in lieu of foreclosure arrangement. This means the homeowner signs over a deed tot he mortgage holder in order to avoid the process of foreclosure.
This can be a good arrangement for a homeowner, but not always. Sometimes it backfires. This happens when a deal if offered to the homeowners by a bank, and the bank gets the home, but the homeowner is not discharged from the debt. Many homeowners don’t understand or doubt the banks can do this – but they can. They do it often even when the homeowner may actually have superior rights in the property to the mortgagee. Nonetheless, the bank may offer an agreement to withhold foreclosure against a homeowner if the homeowner merely agrees to move out of the home. But the documents used to accomplish this goal, confirm a debt obligation on the part of the homeowner, perhaps unwittingly.