How to Operate Effectively as Market Changes.

Dallas -- At the recent SourceMedia Mortgage Servicing Conference here, panelists said the old act of providing $500 to $1,000 upfront to borrowers in default for "cash for keys" is changing. Lorenz Schwarz, president, Phoenix Asset Management, said his company finds it to be highly ineffective.

The rate is increasing by 30%, which makes sense since the average trash-out alone is between $1,500 and $2,000 these days.

Cash-for-keys agreements require that the occupant leave the property in the same condition from when they moved in.

It's good to aim for completing the cash for keys in the first 21 days, said Cheryl Travis-Crawford, director, REO dispositions, Freddie Mac.

She said those being forced out often disassemble the house as borrowers do a number of things that create extraordinary expenses. Servicers are eliminating that cost upfront by using cash for keys.

"At this point, servicers need to be liberal about the amount they offer the borrower. That means speaking to the individual and finding out what their needs are," she said.

"Does the borrower need a downpayment or a security deposit? Do they need a moving truck?"