As discussed in a previous article Unlawful Detainer Actions (“UD”) can be long, costly, and may even be prohibited by the Helping Families Save Their Home Act. In the face of these difficulties, many lenders have come up with alternatives to the UD and, in some circumstances, to foreclosures.
As to be expected, all of the alternatives require some cooperation from the resident as the tenant or borrower or occupant must voluntarily leave the property. On one end of the spectrum, some tenants/borrowers/occupants can see the writing on the wall and will voluntarily walk away upon receiving the notice of the trustee sale.
On the other end, some former homeowners (who are now “tenants at sufferance” or less kindly, “squatters”) will require financial incentives under what is commonly referred to as the “cash for keys” program. There, the former homeowner or occupant will negotiate with the lender on a date which the debtor will vacate the premises.
Typically, that is anywhere from 1 to 3 months in order to give the tenant time to find another residence. In addition to that time, many lenders and servicing companies will offer a cash incentive of anywhere from $1,000 to $5,000 in order to facilitate the transition. As part of the transaction, the homeowner generally promises to maintain the property in good repair, gives right to sue on any part of the transaction, and stipulates to relief for the bank.
As a practice note, these negotiations can occur at anytime, including before foreclosure and continue through the day of the UD trial. Some tenants are willing to grant a Deed in Lieu of Foreclosure which allows the lender to avoid the costly process foreclosure. [Lenders will only accept a Deed in Lieu if clean title is assured, no other loans, judgments or tax liens.]
Additionally, on the morning of the UD trial, many homeowners are willing to negotiate a move out date where 30 to 45 days are usually granted in exchange for a minimal amount of cash and the removal of any costs for rent or attorney fees sought by the bank.