HAHAHAHAHAHAHAHAHAH
Some Buy a New Home to Bail on the Old
Fannie Plans Rules
To Avoid Practice
Described as Fraud
By NICK TIMIRAOS
June 11, 2008; Page A3
Next month, Michelle Augustine plans to walk away from her four-bedroom house in a Sacramento, Calif., subdivision and let the property fall into foreclosure. But before doing so, she hopes to lock in the purchase of another home nearby.
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In markets hit hardest by falling home prices and rising foreclosures, lenders and brokers are discovering a new phenomenon: the "buy and bail," in which borrowers with good credit buy a new home -- often at a much lower price -- then bail out of the "upside down" mortgage on their first home.
Homeowners are able to pull off this gambit -- which some lenders and real-estate agents call mortgage fraud -- by taking advantage of mortgage-lending practices that allow them to buy a new primary residence before their existing residence has been sold. And with the lending industry in disarray as it tries to restructure millions of mortgages, some boast they are able to pull off the strategy with ease.
Wow! DiTech was right: People ARE smart!!
5 comments:
Well, it may be smart from a personal financial perspective but it's really slimy. Someone has to pay for this and it ends up raising the cost of borrowing for the rest of us. And of course, there's no shortage of slimy real estate agents promoting this idea.
Aren't there fraud statutes that cover shenanigans like this?
I mean, you do a "look back", and you see a person bought one house and then defaults on the one bought previous to that, it looks like bank fraud, which is a felony.
Also, should there be a deficiency after the foreclosure on the first house, can the lienholder not hit your mortgage on your second home for the diff?
I don't think you get it Stuck in the City. Seriously, I think your head is stuck somewhere else. Do you realize that our entire economy is built around the ability to secure credit? I wonder what will happen if no one could get credit because lenders were getting 'ripped off' by homeowners? This is a MAJOR part of the story that has not been told. The fact that consumers bear some responsiblilty too. Wake up and join the real world.
david, i believe "stuck" was being sarcastic.
david, if you start to follow this blog, you'll realize that "stuck" is being very sarcastic, and is one of the biggest supporters of sensible lending practices and making consumers bear responsibility for their behavior.
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