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'Cash for keys' gets new name

Hand holding a miniature modern detached house isolated

Hand holding a miniature modern detached house isolated on a white background For Home Section / Judi Yuen - lsmain03 . ( iStock ) ltc Credit: iStock/iStock

Lenders have been paying homeowners money to vacate foreclosed homes, but don't call it "cash for keys" anymore.

That decades-old term has been replaced by "financial relocation assistance," says broker Mark Palladini, whose Bohemia company Map Real Estate Services handles foreclosure listings for lenders.

"I just think it's another way of making it more palatable for everybody," he said. "Cash for keys sounds too crude."

However it’s called, the payments have become more common in the foreclosure crisis as lenders try to get properties off their books. Lenders give money to homeowners or tenants in exchange for their departures by a set date.

Payoffs have gone up over the years, as high as $5,000 when it was perhaps about $1,000 before the lending market began crashing in fall 2007, the industry veteran said.

"Twenty years ago, one guy got two grand, and I was like, 'Wow, he got $2,000 to move out?' Nowadays, the banks understand they need to turn these properties over and they don't want to be in war with the people living in the house. They understand the situation."

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