Short Sales, Deeds-in-Lieu and “Cash for Keys”

  • 07/23/2013
  • News

by: Joseph Gonzales  

Short Sales

In simplest terms, a short sale is when a bank agrees to accept less than the total amount owed on a mortgage to avoid having to foreclose on the property. Not all lenders will accept short sales because there may be times where it would make more financial sense for the lender to foreclose.  Additionally not all sellers nor all properties qualify for short sales. However, often times a short sale is a viable solution for lenders because it saves them time and money rather than having to proceed with the costly litigation of a foreclosure.

Different lenders have different eligibility requirements for approving a short sale and Eric Ortiz Law can help with this process by ensuring that the homeowners get all the necessary documents submitted to the lender in order to get approval for a short sale. Some of the typical steps and documents a borrower will need to complete and submit to a lender for short sale consideration include: contacting the lender to get the process started, a Preliminary Net Sheet (an estimated closing statement of the expected sales price, costs of the sale, unpaid amounts on the loan, etc.), a hardship letter, proof of income, copies of bank statements, and a purchase agreement and listing agreement.  An attorney can aid in getting you approval for a short sale if you meet the lender’s qualifications.

While a short sale may not always be the best option for all borrowers it is often times a better solution than allowing a house to be foreclosed on. It is important to understand that a short sale may be considered to be a derogatory mark on your credit reports but generally the effects of a short sale are less damaging than a foreclosure.


A Deed in Lieu of Foreclosure (DIL) is where a borrower voluntarily deeds their home to the lender in exchange for a release from all obligations under the mortgage.  As with a short sale, Eric Ortiz Law can help you determine whether your loan qualifies for DIL and get approval from the lender. A DIL is generally more complex and there are potential tax consequences to such an option and many steps the lender will require before it accepts it rather than proceeding with foreclosure.  Eric Ortiz Law can help with all steps of the DIL process. 

“Cash for Keys"

Through the Home Affordable Foreclosure Alternatives (HAFA) program, “Cash for Keys” is a program that not only gives the homeowner money to do a Deed-in-Lieu of foreclosure, but it also provides protection and a reasonable time-frame to move on. With this program, the lender will actually pay you to vacate the home in a timely fashion and the money you receive in exchange is intended to help pay for your relocation costs. This program is generally available to borrowers with a mortgage on their principle residence when the total monthly mortgage payment exceeds 31% of their gross income, the borrower has been denied a loan modification under HAMP, and when they have a lender who participates in the program.  Eric Ortiz Law can help qualified homeowners who want to walk away get “Cash for Keys.”