Buying a 2nd home then foreclose the 1st home... (foreclosed, financial, ARM)

[pghquest]

Originally Posted by k374

What your friend is doing amounts to fraud. Deliberately trying to scheme the bank is illegal. It is similar to trying to charge up the credit cards and filing BK. Unless your friend wants to risk going to jail if caught I suggest against it

Please list the code violations involved because its not illegal, nor is charging up your credit cards before filing bankruptcy. Immoral, possibly.. Illegal.. I'd need to see the code violations to believe it.

[TristansMommy]

Originally Posted by pghquest

People have been doing this since the beginning of financing history. Real estate investors cash out all the time to re-invest, and then occasionally pick and choose what properties they wish to continue to hold onto as the market changes.

The "shock" that people are having because this is being done by a "family man" is almost laughable.

Exactly.. he's not doing it to be greedy.. he's doing it for his family....

[solanoMan]

He bought his home at 2002 for around 350k. Two to three years ago it was appraised at around 530k+. He took out 80k from the equity. Now the house is appraised at around 420k+. His option ARM mortgage payment will double on March. He said that he owes around 550k+ on the house because of the HELOC and the option ARM he has been using is increasing his principal.

He is paying around 2800 a month for the house and he is expecting it to increase to 5k+ after Feb. He wants to retire 10 to 15 years from now and he sees no profit in keeping his current home so he purchased a second home before abandoning the first one. The second home is under his wife's name.

He bought the second home for 436k with a mortgage payment of 3300 a month, 30 year fixed. He sees to profit from his brand new home in the future which he will use for his retirement. He knows that this will affect his credit and maybe her wife's credit too but they are not planning to acquire a loan in the near future. They already have credit cards and may continue to use them. They have a new car which is fully paid for. The couple makes around 130-150k a year.

[TristansMommy]

Originally Posted by solanoMan

He bought his home at 2002 for around 350k. Two to three years ago it was appraised at around 530k+. He took out 80k from the equity. Now the house is appraised at around 420k+. His option ARM mortgage payment will double on March. He said that he owes around 550k+ on the house because of the HELOC and the option ARM he has been using is increasing his principal.

He is paying around 2800 a month for the house and he is expecting it to increase to 5k+ after Feb. He wants to retire 10 to 15 years from now and he sees no profit in keeping his current home so he purchased a second home before abandoning the first one. The second home is under his wife's name.

He bought the second home for 436k with a mortgage payment of 3300 a month, 30 year fixed. He sees to profit from his brand new home in the future which he will use for his retirement. He knows that this will affect his credit and maybe her wife's credit too but they are not planning to acquire a loan in the near future. They already have credit cards and may continue to use them. They have a new car which is fully paid for. The couple makes around 130-150k a year.

He's doing what is best for him.. and I can't blame him..

[marmac]

to the OP--------when your friend took that $80,000 equity loan out 2 years ago, did he sign his signature with the stipulation that it only applied if home values kept going up?

The we wonder why this country is in such a "mortgage mess" and people looking to the government to help with their obligations that they signed.

[olecapt]

Originally Posted by marmac

to the OP--------when your friend took that $80,000 equity loan out 2 years ago, did he sign his signature with the stipulation that it only applied if home values kept going up?

The we wonder why this country is in such a "mortgage mess" and people looking to the government to help with their obligations that they signed.

His sin was worse than that of the bank that gave it to him? On top of an option ARM.

I would think he gamed the system fairly. That is the American way.

And he is not looking to the gov to help him out...

[Niners fan]

Originally Posted by TristansMommy

He's doing what is best for him.. and I can't blame him..

Originally Posted by olecapt

His sin was worse than that of the bank that gave it to him? On top of an option ARM.

I would think he gamed the system fairly. That is the American way.

Spin it anyway you want it is still dishonest. It is sad that so many in this country are so self-centered.

Why doesn't your friend, who makes a good income, buy the second house and keep paying on the first one until values go up to the point where he can sell it? Then he can be earning equity in the second home and eventually the first one too.

He signed an agreement to pay to loan. I realize there are legitimate reasons for foreclosure sometimes. Nothing you have said would indicate this is one of them.

Originally Posted by olecapt

And he is not looking to the gov to help him out...

In a very real sense he is asking taxpayers to absorb his loss. He is not doing it through the government but the cost of his dishonesty is spread out among other homeowners.

[olecapt]

Originally Posted by Niners fan

Spin it anyway you want it is still dishonest. It is sad that so many in this country are so self-centered.

Why doesn't your friend, who makes a good income, buy the second house and keep paying on the first one until values go up to the point where he can sell it? Then he can be earning equity in the second home and eventually the first one too.

He signed an agreement to pay to loan. I realize there are legitimate reasons for foreclosure sometimes. Nothing you have said would indicate this is one of them.



In a very real sense he is asking taxpayers to absorb his loss. He is not doing it through the government but the cost of his dishonesty is spread out among other homeowners.

I am sorry but you simply do not appear to understand what he did.

His "transgression" is that he ended up owning another home instead of renting one. But he had no means of avoiding the foreclosure. That was effectively certain when the market went down.

The only thing that is even morally questionable would be if he took the HELOC in contemplation of the eventual foreclosure. That might give him a dose of moral guilt but nothing on the legal side. And even that may be justifiable. One provides for ones family...even if not fully legally. One can be moral and illegal.

Again a guy was cornered by circumstances some of which were beyond his control and cleverly wiggled out. And now you condemn him. You have at best a weak and possibly non-existent moral complaint and nothing legal.

[Bob The Builder]

Ahhh. Let he who is without sin cast the ZZZZZZZ Snooze. Your buddy has not done anything illegal. The stupid lenders should have had the cost of this transaction factored into their pricing. If they didn't, then it is their stupid fault. If the shoe were on the other foot, the lender would ********* to the walls.

[RoaminRed]

Originally Posted by olecapt

I am sorry but you simply do not appear to understand what he did.

His "transgression" is that he ended up owning another home instead of renting one. But he had no means of avoiding the foreclosure. That was effectively certain when the market went down.

No, his "trangression" is that he bought a second house when he couldn't even afford his first one, and he's going to dump the first one because he's irresponsible. He should have rented instead of bought another house. Sacramento has TONS of available rental property.