Bank of America Offering Cash for Keys

Saturday’s St. Pete Times had an interesting article about how Bank of America is offering cash to homeowners who are delinquent on their mortgage payments.  Instead of pushing for foreclosure, BOA is offering cash in exchange for the homeowners consenting to the home being sold to a third party for less than the amount owed, i.e. a short sale.   

In an industry littered with horror stories and negativity, this is good news.  If you’re skeptical, don’t be – this is a natural consequence of foreclosure defense attorneys like Stopa Law Firm making it difficult for banks to foreclose through the court process.  In other words, take a second look at my website, written in early 2008, including this sentence:

If your bank cannot win its foreclosure lawsuit against you quickly (because you are fighting for yourself and defending your rights), it may be willing to negotiate with you in ways that it otherwise wouldn’t…

 I foresaw resolutions like this years ago.  It only makes sense.  If foreclosure defense attorneys are continuing to make it difficult for banks to win in court, and the court systems are so clogged that cases are moving slowly, it makes perfect sense for banks to try to find a way to avoid the court process and resolve these disputes in other ways.  Giving homeowners facing foreclosure cash payments in exchange for them consenting to a short sale is an obvious solution for the banks.  It’s a “win” for both sides – the bank gets the property sold and the homeowner gets money to move elsewhere. 

As the article suggests, I’m sure this solution won’t work for all homeowners.  For instance, the article notes that BOA isn’t intending to waive a deficiency judgment in all cases.  That’s ridiculous – it doesn’t help to put a few grand in your pocket if the bank can get a judgment against you far in excess of that amount.  This why we all need to keep fighting.  The more difficult we make it for the banks to foreclose, the more inclined they’ll be to give homeowners a fair resolution.  And make no mistake, that’s what’s happening here – the banks don’t care about being fair to homeowners; they care only about avoiding the time and expense associated with foreclosure lawsuits.  

Here’s the article. …

Bank of America is offering up to $20,000 to select Florida homeowners willing to agree to a short sale instead of entering foreclosure.

To sweeten the deal further, the nation’s largest lender will consider waiving the deficiency on the loan, which allows homeowners to sell the house for less then they owe without having to make up the difference to the bank. It can save homeowners thousands of dollars.

Not every Bank of America customer in Florida will be eligible for the program, which pays a minimum cash incentive of $5,000. It’s targeted toward home­owners who cannot afford their mortgages.

To quality, the short sales must be submitted for bank approval by Nov. 30 and must close by Aug. 31. Sales already under contract are not eligible; neither are properties outside of Florida.

This is a “test-and-learn” program being rolled out only in Florida because of the higher foreclosure rates than other parts of the country, said Christina Beyer Toth, a Tampa-based spokeswoman.

Florida is seen as a viable market to gauge short-sale response when presenting home­owners with relocation assistance, she said. If successful, the plan could expand to other states.

The bank notified select Florida real estate agents this week about the offer.

“It will get a lot of people off the fence about wanting to sell their home,” said Steve Capen of Keller Williams Realty in St. Petersburg. “This makes sense.”

What’s in it for Bank of America? It saves attorney fees, court costs and property taxes by avoiding foreclosure. It also speeds the process of getting bad loans off its books and gets the properties back on the market faster.

Capen, who specializes in short sales, plans to heavily market the offer to clients. But he cautioned that homeowners shouldn’t get overly excited because many of these plans have restrictions.

“It will only help a fraction of the people,” he said.

Homeowners get the cash after the short-sale deal closes. A caveat: Homeowners might have to pay income taxes related to the deficiency waiver and the cash payout.

The cash payouts give home­owners a reason not to trash their homes or strip them bare before moving out. When houses enter foreclosure, home­owners can essentially live for free until banks take possession at the end of the court process, which takes an average of nearly two years in Florida.

Attorney Chris Boss of Yesner & Boss said the deficiency waiver will enable homeowners to buy a house without filing bankruptcy or waiting three years from when foreclosures become final.

“It’s a chance to get away from the house with some money in your pocket,” Boss said. “This is good for the economy.”

Other national lenders started similar programs.

Late last year, JPMorgan Chase began giving homeowners $10,000 to $20,000 and waived losses on the mortgage. The bank still suffers a loss in the process, but generally speaking, sale prices on short-sale homes are higher than foreclosed homes.

Real estate experts and economists have said the housing market cannot fully recover until the millions of distressed mortgages are removed from the system.

Mark Stopa

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12 Responses to Bank of America Offering Cash for Keys

  1. Pingback: Bank of America Offering Cash for Keys | Foreclosure News Online

  2. Pingback: BOA Reversing: Cash for Keys up to $20,000 « Livinglies’s Weblog

  3. Pingback: BOA Reversing: Cash for Keys up to $20,000

  4. Phil McWilliams says:

    Hey BOA, I’ll save you 20k. Reduce my principle to short sale value and current interest rates and I’ll start paying again. No 20k bribe, Realtor, title work or waiting 6 to 12 months. There’s no need to show the house or look for a buyer. I’m right here. Just write a new loan and we’ll close before values sink any further. Well…… Bet they don’t take me up. They WANT to put me out and give my home away, don’t you BOA!!

  5. Phil McWilliams says:

    My situation was made worse by KEL. I called KEL and discussed a strategic default. They told me everything I wanted to hear until I gave them my credit card number. After that they recommended that I apply for a HAMP mod. After being approved for the HAMP mod (which they highly suggested that I accept), it was BOA that finally admitted that everything would revert back to original terms plus interest in 5 years. My own attorney would not even give me a straight answer as to what the offer actually was. It took the BANK to explain it to me. I paid 165k for a house worth 65k and after I got screwed by everyone from the appraiser to the agent to the bank, my own attorney screwed me, too. Now it looks as though I WILL loose my home because I listened to and trusted KEL.

  6. J. Saiz says:

    I’ve been dealing with BOA for the past 11 months now trying to get my home loan mortgage modification and sensing them papers as requested and I learned that the process was stopped and the reason I learned the process was stop it was because I called them about a month ago to find out what was going on why no letter or phone call regarding the modification not even a courtesy letter and you really think BOA care about home onwers, they want to sink us but what they do not know that they are sinking themself because there is no one and nothing bigger than the allmighty.

  7. Carol Marie Wozniak says:

    Isn’t there any way to know ahead if the battle is a waste of money. Maybe I should just leave. Do people ever get their house? Or am I just postponing the inevitable. I was hoping there was a good chance of getting my house outright. I have already paid 160,000 for a 110,000 house. What is the point? I am a senior citizen who got run out of my job, then run out of my marriage, now, run out of my house. How discouraging.

    • Mark Stopa Mark Stopa says:


      I know it can be frustrating, but it’s not a waste of money to fight IMHO.
      At worst, you save a lot while the case is pending.
      At best, you get a resolution that’s acceptable.
      Don’t give up.


  8. Jayrae says:

    It took almost one year to get our short sale approved with bank of america in 2010 and it was a nightmare process. It is possible but you have to stay totally on top of them since they will drop your paperwork at random, throw your file back to the wrong dept, and similarly screw up as many ways as they can but give you the run around. We stayed on top if it calling them daily to make sure things go back on track when they inevitably screwed up again. The whole short sale process os a joke but we are living proof that it is possible and it can work but you have to totally stay on top of it. We did this because we had the best sellers realtor agent ever his name is Jean luc android, he is simply the best, he’s in the boca area and he’s extremely professional and effective with the professional contacts necessary to get a deal to actually close. Also we learned afterward with bank of america when dealing with the 1099 (this was something we had to deal with since this was an investment property sale), that bank of america will totally screw you if they pay out your property insurance, and flood insurance on your behalf, they add on to your principal owed the insurance cost at 10x the market rate, for example where we could have gotten our own insurance for $2000 they took out insurance at $25000 and tacked that onto our bottom line. So even if you are not paying for mortgage anymore, if you are considering short sale and facing the 1099 afterward it is probably worth still buying your own property and flood insurance! Lessons hard learned from a Florida investment property short sale….

  9. Pingback: BOA Reversing: Cash for Keys up to $20,000 | Challenge Your Lender

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