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"Buy and Bail" is Mortgage Fraud

A Sacramento homeowner was recently quoted in the Wall Street Journal talking about her plans to purchase a "second home" and then let her current home—purchased in November 2006 for much more than similar homes are currently selling for—fall into foreclosure.
"I can find the same exact house as what I live in right now for half the price."
But this practice, referred to in the mortgage market as "buy and bail", is considered by many in the real estate industry to be mortgage fraud. Fannie Mae, established in 1938 as a government agency but now a privately-held lending institution that provides financing to most of the nation's largest home mortgage lenders, is tightening regulations to prevent these abuses of the system. Individual lending institutions are reviewing their own lending practices and underwriting requirements and are watching for borrowers that are at risk of engaging in buy-and-bail.

Legitimate borrowers planning to take advantage of the current sluggishness in the real estate market to buy a second home or move-up property can expect tighter loan standards and will likely need to produce additional evidence.

Thinking about renting out your current home and moving up to something better? Here's what your lender will probably request from you:
  1. Supporting evidence to back up the claim that the current home will be rented out, including a signed lease agreement;
  2. Proof of income to support principal, interest, taxes, and insurance on both the current residence and the new property being purchased;
It's important to keep in mind that a buy-and-bail also has serious, long-lasting consequences for a borrower. Not only is a foreclosure a big hit to a borrower's credit, but many lenders are also suing for fraud.

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posted by Rob McQuade @ 3:04 PM,

3 Comments:

At October 27, 2008 1:54 AM, Blogger  said...

外国為替
美容整形
引越

 
At October 27, 2008 1:55 AM, Blogger  said...

クレジットカード 現金化
投資
FX
データ復旧
コンタクトレンズ
不動産

 
At October 27, 2008 1:55 AM, Blogger  said...

アフィリエイト
インプラント
不動産
派遣
キャッシング
toefl
パソコン自作

 

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