Special offer

Homeowners take ‘cash for keys’ to escape debt

By
Real Estate Broker/Owner with UW Realty Company, LLC

ANALYSIS By Al Yoon REUTERS updated 3:15 p.m. ET, Fri., March. 12, 2010 NEW YORK - Jon Daurio, chief executive officer of mortgage investor Kondaur Capital Corp., recently offered a $4,000 check to Barry Culver for the deed to his Bryan, Ohio, house. With the exchange, and a pay-off to a second-lien holder, Culver was freed of $120,000 in crushing mortgage debt on the house, said Daurio, who had bought the right to cut the deal when he purchased the mortgage months earlier. The house, after repairs, is now on the market for $47,500. "It got me out of a bind," said Culver, a former Kmart employee who has since relocated near his in-laws in Tennessee where job prospects are better. "I got a little cash out of it and was able to pay off other stuff I owed." Such "cash-for-keys" offers are common for Orange, California-based Kondaur, one of the largest players in the business of buying and resolving distressed loans for profit. The business is growing more popular, with volumes of loans for sale at their highest since the founding of Kondaur in July 2007, said Daurio, a veteran of the subprime lending industry. At DebtX, a Boston-based loan exchange, the number of bidders on pools of loans is up 25 percent since last quarter.

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