Posted on 06/12/2008 5:26:04 PM PDT by RKBA Democrat
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.
SNIP
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.
(Excerpt) Read more at online.wsj.com ...
|
Interesting how people can justify anything by simply calling it business. Isn’t that what mafia hit men say to their victims just before the whack?
This is the kind of crap that got us into this mess to begin with.
No it’s not legal. She’ll have to lie on her new mortgage app. I don’t know if a bank will investigate borrowers thoroughly enough to guard against, i.e. search for deeds recorded in her name.
In any event, some bailout would be conferred on her by those of us who follow the rules; via the media/political complex.
CG
There’s always kerosene and a homeless person.....
Legal, yes. Ethical? It stinks like Tijuana in August.
Ethical...Ethical. Sounds familiar, but not really ringing any bells. As long as its legal it’s OK, that’s the American Way!
“Interesting how people can justify anything by simply calling it business.”
The biggest A-holes and former “friends” I’ve know where those type of people.
Are you proposing to set a homeless person on fire?
The easiest way to solve (and it would have been the easiest way to avert) this “trend” would be to bring back that musty, cobweb-covered old concept called the “20% down payment”. You too young t’ remember those, sonny??
The mortgage on the old house will show up on her credit report.
The new lender knows about the existing home. However, the new lender accepts a promise that the homeowner will use rental income to pay the mortgage on the first home.
The problem is that the interests of the note holder on the first home do not match the interests of the lender on the second home. The lender on the new home wants to lend money. He does not care about the homeowner defaulting on the first loan. The note holder on the first home should sue the lender of the second home for encouraging default.
BINGO!
As any lowyer will tell ya... "possession is nine points of the law!"
I had a relative who did this after the Northridge Earthquake in LA. His condo association was vastly uninsured and they assessed all the owners a portion of the damages to common areas. On top of his own damages he was looking at putting some ridiculous amount into this tiny property, so he bought-up and walked.
I’m not saying I approve, but I certainly understand.
“Don’t think this will work in the end. Whatever the balance due is after her 1st house is auctioned or sold by the bank will still be her responsibility.”
Depends on the state. I believe in some states mortgage debt is without recourse beyond foreclosure of the home in question. The mortgagor is left holding the bag.
Even if that isn’t the case, it’s one thing to have a debt, it’s something quite different to be able to collect on it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.