Real estate professionals call it “buy and bail,” acquiring a new house before one's credit rating is ruined by walking away from the old house because it’s “underwater,” or worth less than the mortgage. This is an attempt to escape payments on a home whose value will not recover in the immediate future while securing a new property, typically at a lower price with a much more affordable loan, based on current rates.
The practice, which constitutes fraud if borrowers make fradulent statements or give fraudlent information when completing loan applications, appears to be continuing even after Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, beefed up standards to prevent it, according to brokers such as Collier and Meg Burns, senior associate director for congressional affairs and communications at the Federal Housing Finance Agency. Whether driven by greed or desperation, the persistency of "buy and bail" underscores the lingering impact of the worst housing crash since the Great Depression.
Full story is available here: http://www.bloomberg.com/news/2010-08-10/-buy-and-bail-homeowners-get-past-mortgage-hurdles-from-fannie-freddie.html
Keep the faith ...
ShortSaleSully
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