1.

Mrs. Micah
June 12th, 2008 at 2:45 pm

Morals – psh, jail – psh. It’s your god-given right to own a house.

(I prefer Mr. Stickman’s approach!)

2.

rocketc
June 12th, 2008 at 9:54 pm

I might actually have to do this soon.

3.

Las Vegas Real Estate Guy
June 12th, 2008 at 10:34 pm

The Wall Street Journal just had an article about this. Can’t believe this kind of stuff is still going on.

4.

Kyle
June 13th, 2008 at 1:40 pm

That’s actually a REALLY good idea.

5.

Mrs.ThePoint
June 13th, 2008 at 6:55 pm

I couldn’t agree more, this is really a GOOD ideal.
I hope I would never need to use this technique, but who ever used it should get some credit for it.
They are smart.

6.

A1 Medical Supplies
June 16th, 2008 at 3:45 pm

I think your right that if you are behind on your mortgage you should try to sell your home. It is a hard market to sell in now, but if the price is right…

I have never really understood why people that know they are not going to be able to afford the mortgage in a few months don’t sell their property. Rarely is it the case that you all of a sudden go into foreclosure. Usually you know long before the bank does that you are not going to be able to pay off the house.

7.

James
June 16th, 2008 at 4:19 pm

i guess it boils down to the person himself. although it could be a way to get out of debt, but the risks involved could stop some people from doing it. personally…. if for instance my back is up against the wall… i’d go for the short sale first, then if all else fails… who knows..

8.

Maria @ Frugal Homesteading
June 17th, 2008 at 6:35 am

Some people are doing this who never intended too–they bought the new house with their first one under contract for sale or rent, and then their contract fell through after purchasing the second house.

Others assumed the geat real estate market would last forever, and now can’t sell and with everything rising in cost, can’t juggle both sets of payments.

Those who did it intentionally are another category altogether.

9.

Mortgage Brokers
June 25th, 2008 at 9:18 am

Wow we dont have this problem over here in the UK yet, but the market is wobbling with prices down 6% this year. Lots of banks already puting rates up.

10.

Mike at Gas Credit Cards
July 6th, 2008 at 4:21 am

What’s even more crazy is there is a judge in California that forgave the debt on a foreclosed home (in favor of the home owners) because they lied on their mortgage application. The judge said the lie was so outrageous the bank should have caught it… so he blamed the bank and ruled in favor of the home owners haha.

11.

Tom
July 7th, 2008 at 1:41 pm

I am in this position but want to avoid anything illegal. What if I just buy a new home and default on the other one? Avoiding the whole renting issue?

12.

mortgage center
July 10th, 2008 at 5:16 pm

This idea hasnt been publisised in the uk yet or used as far as i know, probably because it is nuts and would seriously affect your credit and future finances, probably best of sitting tight if possible and ride out the storm.

13.

Smart Equity
July 11th, 2008 at 4:12 am

All the diagrams were really informative and as well as educative.Keep up this good work.

14.

Laura
August 6th, 2008 at 6:36 pm

My husband and I bought a modest 2 bedroom home in 2/2004. We had the unexpected news a month later that we were expecting our first child. We planned the second child, born in 2007. Now we are expecting twins. Our house is too small, we need to move for business reasons (husband’s job) and our income has been depleted because I am staying home now. In addition, we are upside-down to the tune of abot 20 grand. When I called a realtor to list the home he laughed at me. There are four public auctions in our neighborhood and too many to count in our community. I can’t go back to work because my industry has removed many positions in the area in which we live and I am unable to renew my lisence due to health reasons. In addition, that great rate we have adjusts in 2011. If anyone has a suggestion as to how to get out of my home in a legal, moral way, move to a better community with better schools for my children–anything short of jumping off a bridge–I would love to hear it.

15.

Denise P
August 14th, 2008 at 2:56 pm

Laura: Best that you file for bankruptcy, foreclose on your home and save every penny from unpaid mtge payments. Find a v. modest way to rent a home in a good area for as LITTLE AS POSSIBLE (even a apartment) for right now. Work like crazy to get your credit score up again, keep saving hard, then buy again in a few years – something you can comfortably afford and preferably with the seller who has equity helping you with the financing through your Realtor or an real estate attorney. Real estate attorneys know a lot about the different tricks on how to get into home ownership. I have done all of the above – failed and succeeded, so I know how you feel.

16.

davejavu
August 18th, 2008 at 10:22 pm

I would have never thought to try anything like this, but our realtor basically lied to us when we bought our house. Four years ago, we purchased a house in an area with polluted groundwater. After buying the house, the water came back from the EPA contaminated, immediately lowering the value of our house. Now, in 2008, with the plume shifting right to our well again and prices in town dropping through the floor, we’re in deep. We owe 134K and the house, if appraised today, would probably fetch 110K at the highest. I’m sick, I’m pissed and I see no other option than to walk. It’s either drink poison or destroy our credit. And I’m not too proud to walk. I’ve petitioned the city to put in their water system to no avail, I’ve written anyone and everyone and I’m at the point when I get my next water test in two weeks, I’m going to go to an attorney to get some advice on what to do. I have a feeling he’ll encourage me to file BK. Any other suggestions before I make that leap?

17.

Raymond Kirk
October 6th, 2008 at 7:06 am

Great post! I’ve been very interested in buying a new house for a long time. I didn’t know this buy and bail tactic fraud. Thanks for sharing it.

18.

Anonymous
October 7th, 2008 at 4:34 pm

Wow Dave…you’re going to file bankruptcy over $25,000 debt? Our house has lost $100,000 in value since we moved into it 2 years ago, and on top of that I’ve lost my job and have law school loans to the tune of $80,000. Now that’s bankrupcy material

19.

Arthur Jamieson
October 8th, 2008 at 11:51 pm

Hmm, don’t you think that swapping houses with negative equity for much cheaper ones is morally wrong?

20.

edn143
November 12th, 2008 at 3:13 am

I used to think these sort of tactics were morally reprehensible, sleazy . . . but after the $750 billion + bailout of the same companies that perpetrated this crisis (don’t know this for sure, because the names of the companies bailed out haven’t been released by the Feds), I’m starting to wonder if ethics should play any part at all in our financial decisions. When “normal” people, with good credit scores, start wondering if it’s worth it to play by the rules, we’ve got trouble.

21.

TMS3142
December 28th, 2008 at 12:11 pm

One year ago, my wife and I bought a house then came all the bad news about the economy, the banks, foreclosures. Now, my wife lost her job and I am the only earner. We are able to get by but I am scared to death about not being able to save money for rainy days. Our house is worth a lot less than what we paid for at least by $50k. Things do not look good here in Las Vegas area in the housing market or the economy. The house has become a big burden now. After learning the details of this housing meltdown, I feel that the banks played a bigger role in creating this mess. I take full responsibility in my part for being in this position but the banks also took a chance on some of the people in my neighborhood when they decided to lend them without proper proof of income. I am hoping to go for a short sale but if the banks do not work with me, we are planning on letting the house go and rent. The stress is killing me. I have always tried to do my finances carefully but I guess I was drunk when I decided to buy the house. I do not have any other debt and never been late with my bills. How long will it take to rebuild my credit? It might be 2-3 years before the economy recovers and by then I would have saved enough to make wiser decisions financially. I have learned my lessons the hard way. Never get a house if the payment is going to be more than 25% of your income. I do not want to use the buy and bail tactic. I think it is a lot easier to rent a house and wait until the the house price drops even more. People have underestimated the severity of this crisis. I do not plan on buying a house any time soon (at least 4 years).

22.

Lola
March 16th, 2009 at 5:34 pm

When you buy a second home though. Dont you have to buy conventional…which the down is way higher than a FHA loan. 10% of the home value I think a conventional is???
I really want to buy another cheaper home and have enough if I could do a FHA loan, but not conventional. I want out of my house that has lost of $50K in value, and my payments are too high for me to make due to job loss, and pay reductions. But I still want to own a house..just a lot cheaper one…

23.

Michele
March 29th, 2009 at 10:43 pm

I live in Northern CA…the house next door sold for $409,000 in July 2006. The couple who bought walked away a year later (2007) & it just sold this past January for $188,000. I currently owe $310,000….lived here 6 years…put on a new roof, new landscaping, new heating & a/c, remodeled 2 of my 3 bathrooms, new doors (inside & out), new carpet, installed laminate flooring downstairs, new water heater, new automatic garage door, and more…and I can sell my house for around $188,000 – $190,000!!! I am seriously considering the “buy & bail”!

24.

Jon-Paul McTavy
April 19th, 2009 at 4:55 am

hmmm !!!!Work like crazy to get your credit score up again, keep saving hard, then buy again in a few years – something you can comfortably afford and preferably with the seller who has equity helping you with the financing through your Realtor or an real estate attorney. Real estate attorneys know a lot about the different tricks on how to get into home ownership. greets to you all !!!

25.

Carpet Bedfordshire
April 20th, 2009 at 7:30 am

It is about time that people get their own back with the banks. Unfortunately for us they will still continue to dictate whether you are credit worthy to purchase your house. If we looked at the banks credit rating would you do business with them…My bet is no!

26.

Carpet Flooring Bradenton
April 20th, 2009 at 7:50 am

Never used such technique but sure wanted to try once

27.

California Foreclosed Homes
April 28th, 2009 at 5:17 am

“I couldn’t agree more, this is really a GOOD ideal.
I hope I would never need to use this technique, but who ever used it should get some credit for it.
They are smart.”

28.

Builder
April 30th, 2009 at 5:28 am

That’s a great idea. I might give it a thought.

29.

Title Insurance Tampa
May 1st, 2009 at 2:08 am

Swapping house great thinking, i don’t think any harm to do so, but needed smart work.

30.

Wedding Planning
May 12th, 2009 at 7:34 am

It is about time that people get their own back with the banks. Unfortunately for us they will still continue to dictate whether you are credit worthy to purchase your house. If we looked at the banks credit rating would you do business with them… Real estate attorneys know a lot about the different tricks on how to get into home ownership. greets to you all !!!

31.

Flooring
May 18th, 2009 at 2:21 am

We are obviously in a very bad housing market and unfortunately for owners it is a buyers market. If you must sell why not try to up the value of your house without spending that much such as installing new flooring that will add value to your home without having to break the bank.

32.

fake rolex watches
May 20th, 2009 at 4:52 am

you may be able to bypass the fraud part of the scheme entirely. Those who’ve pulled it off successfully say there’s nothing fraudulent about it, possibly because it uses the banks’ own policies against them.

33.

debt loans
May 25th, 2009 at 2:30 am

great post, like it

34.

Real Estate Postcards
June 23rd, 2009 at 11:01 pm

Great post, the illustration was very entertaining. People are finding more ways to save on money these days, since the economy is not in its best condition. Thanks for the post.

35.

Alice Radio
July 7th, 2009 at 1:34 am

love really could be scattered by suffering. I love your pictures while feel sad.

36.

credit repair services
July 8th, 2009 at 8:31 am

It’s hard to see your same exact home now on the market for half the price you paid for your home. It sure would be nice to have half the mortgage payment you have now for the same house!

37.

carpets bedfordshire
July 10th, 2009 at 4:48 am

Good comment and I agree irrefutably, your credit will suffer greatly during these times. Banks shouldn’t be able to dictate policy as they are spending our money and are only profitable due to tax payers beneficiary.

38.

justme
November 7th, 2009 at 12:22 pm

What most people don’t realize is that their lenders have mortgage insurance. This assures they are paid, even if the homeowners are in a situation where they have to short sale their home or even bail. What irritates the heck out of me is this. You have an honest hard working couple doing their best in this MESS; taking jobs they would never have, but don’t have a choice if they want to save their home; working night and day, even doing odd jobs for anyone. And after 3 years of struggling and worrying HOW ARE THEY GOING TO PAY THE TAXES AND INSURANCE, (which has tripled where I live) and actually affecting their health; they bite the bullet and try a loan modification with their lender. After FIVE MONTHS of following up, faxing and re-faxing because if the lender doesn’t receive the ‘entire package’ they discard it; spending $200 on faxes alone – they’re told ‘you’re denied. you don’t make enough’ Is there any wonder why good honest hardworking people are turning to other measures that they probably wouldn’t have ever considered this. But here’s the REAL irritating part. When the couple tries a short sale, the lender has the NERVE to threaten the homeowner to pay the portion they agreed to ‘forgive’ This is the same $ that they’re already going to recoup on from the mortgage insurance. And if I’m not mistaken, cuz I’m not sure, mortgage insurance is backed by the government, which is funded from OUR TAXES. So we’re paying again!! Then we wonder why this country is in such a mess.

39.

Katie
December 16th, 2009 at 8:11 pm

I currently live in a house that was bought for 230,000 and is not worth less than 130,000. The house is under my boyfriends name. We want to move and could not even get close to the 160000 he owes on the mortgage, if even getting it to sell at all in this market. I am not willing to wait the 5 years or so to just break even. Unless we got a loan modification we couldn’t even rent it for close to what the monthly mortgage is. We are thinking of stopping payments, saving that amount each month, and waitng to be kicked out. Seeing as how it could take a while, this could be a big savings. Then I can buy a house in my name. His credit will be ruined, but right now we would sell and be down 40,000. Short sale would ruin his credit for a while anyway. I know this is immoral. I am usually responsible but we have been paying our mortgage and only getting screwed. We just wnat to move and get on with our life. Any comments/suggestions on this plan?

40.

Greg
December 25th, 2009 at 4:19 am

Katie, my wife and I are in the same position.Here in Az are house is upside down about 80,000. We have a home equity loan to get my wife through school, and at the time the bank appraised the house an extra 25,000 at the time, but I didn’t want to be upside down if we needed to sell so I took 25k less on the loan. HaHa, look at where we are at now, still 80,000 upside down. I wish now I would have taken the extra 25k. I have a lot more career options in another city right now, but can’t move because of this house. I am renting it out right now, but renters are always late, and I still have to carry $600 extra to cover the mortgage. We have always believed in paying our bills, but have trouble swallowing the fact of having to stay here in Phoenix for another 7 seven years for the house to recover, while I watch my career slip away. Az is worse than Detroit right now. Its hard for me to feel sorry for banks right now after the payday they got. The same people, when things got tight, doubled and tripled peoples interest rates on their credit cards. Like another person in the forum said, maybe shouldn’t have ethics when it comes to business, which this is. I starting to believe this, but I am fighting it. Take a look at the unions. When UPS is up for contract, I bet they get some nasty negotiators in there, and when they don’t get what they want, they threaten to strike (British airways pilots on Christmas) nothing personal, just business. Maybe, I need to get nasty to, but its hard to bring myself to it. So I am just getting by right now, trying to figure it out like you. Good Luck

Ps: I know I am not alone, but writing this helped vent alittle

41.

Katie
December 29th, 2009 at 2:59 pm

Hi Greg, Thanks for your reply. Surprise surprise, we are in Phoenix too. Sounds like a similar situation. Wanting to move to midwest and not wanting to be held down by a house that I don’t really like in the first place. Just looked on zillow.com and a house in our neighborhood that zillow says is worth 110,000 just sold a few months ago for 75,000. Ridiculous. Frustrating. We are in the same situation with renting. My bf did get ahead on his last house when the market was too good, so we can’t complain about some of the loss, but there is no way we can get close to the 1200 a month owed if we tried to rent it. Right now trying to decide if I should but time and some money into painting, landscaping, etc. to try to get it sellable, or just throw in the towel. Keep me posted if you make any decisions. And yes, half the country feels like us, and it is good to vent. I wouldn’t be so unhappy if i was just happy staying in the house for a few years.

42.

Peter Mason
March 9th, 2010 at 12:30 am

Watch this video a couple times. It will dispel any “moral” obligation a homeowner may feel. We got the shaft by the lenders folks.

http://crisisofcredit.com/