Cash for Keys Would Make Lenders Pay Debtors

By Sajid Farooq
|  Tuesday, May 3, 2011  |  Updated 2:47 PM PDT
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Cash for Keys Would Make Lenders Pay Debtors

BLOOMBERG NEWS

Losing your home might not be as painful if regulators have their way.

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Would you take money to leave your house?

That may be an option soon for borrowers who are behind on their mortgage payments and facing a possible foreclosure.

The Financial Times reports that the nation's five biggest mortgage lenders were told his week by regulators that they should consider paying delinquent borrowers to leave their homes and leave them in tact.

The list of lenders possibly includes San Francisco-based Wells Fargo along with Fannie and Freddie Mac and Bank of America.

Under the recommendation, lenders would pay up to $21,000 to delinquent borrowers to give up their keys to avoid a messy foreclosure battle.

Regulators say lenders would win because it would push people out of foreclosed homes quicker and the homes would be in better condition to re-sell.

The program would be aptly named "cash for keys."

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