Comments on: Upside Down on Your Mortgage? Buy A New House For Cheap, Then Default On the Old One!

By: edn143

edn143 — Wed, 12 Nov 2008 08:13:04 +0000

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.

By: Arthur Jamieson

Arthur Jamieson — Thu, 09 Oct 2008 04:51:32 +0000

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

By: Anonymous

Anonymous — Tue, 07 Oct 2008 21:34:48 +0000

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

By: Raymond Kirk

Raymond Kirk — Mon, 06 Oct 2008 12:06:39 +0000

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.

By: davejavu

davejavu — Tue, 19 Aug 2008 03:22:03 +0000

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?

By: Denise P

Denise P — Thu, 14 Aug 2008 19:56:49 +0000

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.

By: Laura

Laura — Wed, 06 Aug 2008 23:36:18 +0000

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.

By: Smart Equity

Smart Equity — Fri, 11 Jul 2008 09:12:13 +0000

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

By: mortgage center

mortgage center — Thu, 10 Jul 2008 22:16:00 +0000

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.

By: Tom

Tom — Mon, 07 Jul 2008 18:41:11 +0000

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?

By: Mike at Gas Credit Cards

Mike at Gas Credit Cards — Sun, 06 Jul 2008 09:21:45 +0000

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.

By: Mortgage Brokers

Mortgage Brokers — Wed, 25 Jun 2008 14:18:27 +0000

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.

By: Maria @ Frugal Homesteading

Maria @ Frugal Homesteading — Tue, 17 Jun 2008 11:35:53 +0000

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.

By: James

James — Mon, 16 Jun 2008 21:19:03 +0000

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..

By: A1 Medical Supplies

A1 Medical Supplies — Mon, 16 Jun 2008 20:45:38 +0000

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.