Tuesday, July 1, 2008

Buy and Bail - Would You?




Definition
: Buy and bail is the result of purchasing a new home with the intention of walking away on the old before the bank forecloses. For example, you owe $400k on your home and the identical property across the street is a foreclosure and is selling for $250k.

The legal stuff: It is considered mortgage fraud. Even extenuating circumstances do not give a home owner the right to commit mortgage fraud. The FBI defines mortgage fraud as, "any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan."

The moral question: Is it wrong to purchase another home today when you have good credit and have been making current payments on time? The caveat - the identical property across the street is, for example, is selling for $250k and you owe $400k and are going to be foreclosed on anyway.

Reality: YOU TELL US

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