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It's mortgage fraud and people ended up fined/in jail. That was my point.
I am not suggesting that the OP is likely to end up prosecuted ( we don't have the statistics on this anyway), but it is possible, and I would never advise somebody to commit a crime. The OP specifically revealed that buy and bail is in his/her mind. Clearly not all people who qualify to carry two homes plan to walk on the first one.
I understand your point. Most (if not all people) prosecuted for fraud outright lie about income/jobs etc. But if you fly under the radar and can prove to the banks you can successfully carry 2 mortgages than it's near impossible to prove fraud.
What the OP is trying to do is clear out fraud. But if you are subtle about it. Say rent out property for a year, than try to put it on the market and it won't sell and let it go into foreclosure, no way the DA's office or the banks can prove willful intent.
Now the OP wants to start defaulting immediately on old home after buying new home.....that's a little easier to prove.
I understand your point. Most (if not all people) prosecuted for fraud outright lie about income/jobs etc. But if you fly under the radar and can prove to the banks you can successfully carry 2 mortgages than it's near impossible to prove fraud.
What the OP is trying to do is clear out fraud. But if you are subtle about it. Say rent out property for a year, than try to put it on the market and it won't sell and let it go into foreclosure, no way the DA's office or the banks can prove willful intent.
Now the OP wants to start defaulting immediately on old home after buying new home.....that's a little easier to prove.
I'm not sure where the line is crossed. If you buy one with the intend of selling the other and put it on the market and doesn't sell at what point is it fraud if you quit making payments? Most of the people that have a house repossessed haven't committed fraud, so are you saying it's fraud because it is a choice to stop paying rather than an inability to pay?
"Mortgage fraud happens when a borrower withholds information -- such as a deliberate intent to stop making payments to another creditor -- or falsifies information -- either of which would cause the new lender to reject the loan if the lender knew about it.
It's also considered fraud to lie on a loan application and produce false documents to the lender. 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."
"Mortgage fraud happens when a borrower withholds information -- such as a deliberate intent to stop making payments to another creditor -- or falsifies information -- either of which would cause the new lender to reject the loan if the lender knew about it.
It's also considered fraud to lie on a loan application and produce false documents to the lender. 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."
I see. Good article and it all has to do with falsifying documents, makes sense. Still, bailing on a mortgage seems wrong to me regardless, fraud or not.
"Strategic default" is a polite way of saying fraud.
It's not fraud with strategic default. Hate to say it. As long as the US lawmakers refused to tighten up on standards and clearly rewrite the way debt collected (like Student loan debt). People will use gray areas to skirt issues.
It's not right morally. But people are within their legal means to do strategic default or even buy and bail.
You see all those financial guys testifying in front of Congress about subprime shorting etc Goldman Sachs a couple of years ago. These Standford MBA late 20's guys stood in front of Congress and flat out said they "don't remember" making trades. Seriously? Young intelligent MBA grads from a top 5 school "don't remember?"
That's the kind of crap that gets away. Mortgage fraud etc is very hard to prove as long as you skirt the gray area. Like I said. You are legally within your means to buy another home (if you already show you can support 2 mortgages). Lay low. Continue to rent out other home for X amount of time than let it go or short sale it. It's near impossible to prove unless you leave an electronic trail
But if you immediately default on old home loans right after moving, than it's a lot easier to prove.
You see if you kinda of play the game for say 12 months of supporting both mortgages than default on first original loan, it's near impossible to prove intent. You can always say like the Sanford MBA grads from Goldman you "tried your hardest" to support 2 mortgages but couldn't. They just cannot prosecute you for fraud in this case. No DA will go after you because chances of proving it very small.
The examples cited above for mortgage fraud were clear cut.
There are thousands of homeowners who can still do buy/bail (but a modified version of it) since they can afford both mortgages. Those who get caught lied about potential rental income, lied about their income in general.
What's different between the homeowners we still posted on this board say they moved and brought another home and couldn't sell their home. They rented it out for 1-2 years. Couldn't generate enough income to support 2 mortgages and now in distress and having to short sale or foreclose on first property? Compare that to someone who does the same maneuver but has intention to default in 1-2 years. You just cannot prove fraud in either example. One is down on his luck. The other did it purposely but lay low. No difference.
There is nothing illegal about qualifying for 2 mortgages. That's why "modified buy/bail" can still work. Obviously like I said. Most people who can qualify for 2 mortgages aren't usually in financial trouble. The people who did real buy/bail falsified rental agreements with no intention of renting it out.
The intent is to swindle the lender of the current property because continued ownership of that property, at the agreed upon terms, is inconvenient.
Very hard to prove "intent" unless you make it obvious.
It's like the difference between what the Goldman Sach's boy genius on stand with Congress "not remembering". In law, one must prove beyond a reasonable doubt. Too much doubt if you paid the 2nd mortgage for x amount of months (while renting it out) and than tried to sell it.
Not trying to pick an argument with you. Those who cheated the system (by closing on new home and immediately defaulting on old home). That's true buy/bail. But there are subtle ways you can buy/bail these days and it's near impossible to prove intent.
Like I said, trying to rent home for another year "hoping" market turns around and than defaulting. The legal system cannot determine who's doing it on purpose or who's not doing it on purpose. Someone who does it purposely can always argue "hey I paid the mortgage on old home for 12 months, rented it out" "than tried to sell it but couldn't" No court system can ever convict those people.
Because if you go after those people who you think "intended to defraud" Than you must go after every single homeowner who defaulted on their old home when they purchased a new home.
This is the question typical I suppose. We do not qualify for load modification make too much money etc etc.
*Current home 23yrs left 6.5% underwater 55K
*Credit score 670's
We live in Louisiana.....would walking away, but buying a new house before this becomes 30 days late make sense?
Currently we can buy nicer house, at a lower rate 4.50% at least, put 15-20% down and once closed "strategically default" on the other? Our note would also be 400/mo less, nicer house, and save 7 years on the length of the mortgage.
Any input?
So you bought one house that is underwater big time, yet want to double down and lose more money in real estate while committing fraud? Awesome.
This is the question typical I suppose. We do not qualify for load modification make too much money etc etc.
*Current home 23yrs left 6.5% underwater 55K
*Credit score 670's
We live in Louisiana.....would walking away, but buying a new house before this becomes 30 days late make sense?
Currently we can buy nicer house, at a lower rate 4.50% at least, put 15-20% down and once closed "strategically default" on the other? Our note would also be 400/mo less, nicer house, and save 7 years on the length of the mortgage.
Any input?
Question...why in the world would you just throw this property away? Why not rent the property, at least try to get it to pay for itself until your market recovers and you could possibly sell it without completely destroying your credit???
There are so many better solutions.
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