Buying a 2nd home then foreclose the 1st home... (approval, requirements, refinancing)

[olecapt]

Originally Posted by RoaminRed

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.

Stil nonsense. He can afford his second house. He could not afford the first.

YOur argument is that he is allowed to rent but not buy. Why on earth wouold that be?

I know of a young couple...thankfully not my clients...who are in a similar trap. They bought a nice little tract house in early 2005 for $350K with low money down. They saved up their money and 8 or 9 months ago they put 75K down on a fancy loft with mid 2008 delivery. In the following months their existing place has lost 100K in value due to the downturn. Unless they can pull off this sort of a manuever they are out their 75K. Did they do something wrong?

I am going to send the girls parents a copy of the article.

[TristansMommy]

Originally Posted by RoaminRed

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.

Actually .. better way to put it..

He can't afford the INTEREST on teh first house, but CAN on the second..

He can't afford to pay the PROFIT someone else will make on the increases in interest.. lets say from the 5% up to the 8% etc.

NOW>. if the mortgage company would re-evaluate and say.. okay.. herei s a person whos been paying 5% but can't afford 8%.. let's compromise.. because obviously he was able to afford 6%..then that bank COULD Have reworekd the deal, kept the owner in the first home AND keep collecting their principal plus the interest.. but instead they'd rather foreclose and loose the money.

Yeah. if he were the only one in this debacle nothing I said would matter..but he's not. .and the industry needs to wake up and work WITH us rather than against us!

[sponger42]

Wow, I didn't realize being a homeowner and a family man means that you can do no wrong.

So, if I'm a family man and a renter, and my landlord raises my rent beyond what I can afford, it's okay for me to go out, buy a new car, and rent a second apartment with just my spouse on the lease, and just stop paying rent on the first one, letting the landlord go through the 60-90 day eviction process and eat all my missed rent? Or is sainthood only conferred upon the exhaulted homeowner and not on us "stupid" renters who saw the bubble inflating and did the best thing for our families financial future; staying the ***k away from the real estate market?

Nobody stuck it to this guy. The warning signs were there right from the beginning for anyone who didn't blinker themselves, despite what HGTV or the NAR told us, it was insane to purchase property or take equity out of your home any time after 2003 (actually more like 2001). If he wanted to take care of your family like a responsible adult, he should've checked out the writing on the wall before mortgaging their future. Now he's trying to weasel out of his obligations.

However, I have a feeling that the bank is going to scrutinize both his credit and his wife's credit, and this scheme probably won't fly. I wouldn't care one way or the other, except that if millions of homeowners follow in this guy's footsteps, guess who's going to eat the loss from their irresponsible shortsighted behaviour?

[SKB]

Originally Posted by marmac

Something tells me it won't be long before "your friend" has his 2nd house foreclosed.

"past behavior is a good judge of future behavior"--------(especially the recent past)

I love that, I always use it, the best prediction of future behavior is based on past behavior. This has been my personal motto for years!!

I also love the "friend" reference, you just scored a point from me!!

[interstaterover]

Originally Posted by solanoMan

A friend of mine who lives in Sacramento, CA is planning to buy a second home and foreclose his first home which is losing value right now. He also borrowed around 80k from the equity (Equity Line of Credit) of his first house 2 years ago. Now the home's value dropped and he owes more than the home is worth. He also has an Option ARM mortgage and he is expecting his mortgage payment to balloon drastically in 2 months time.

He plans to buy a 2nd home then immediately stop making payments on his first home and just abandon it. What will be the drawbacks of this?

Boy, what a *******! Tell your friend to pay back their obligation. It's jerks like that that are ruining the economy!

[nic529]

People running away from their issues and trying to scam others is why our economy is where it is today. If your friend goes through with this not only will his credit be ruined for a very very long time, but as another poster said they could actually go after the new house. This is just stupid. Lots of people are in this situation right now - those of us who are responsible adults will work through it and hope things get better - but with idiots like this guy its gonna take a lot longer.

This is the 4th thread I've seen on people thinking about "letting" their homes go into foreclosure.......what is wrong with people!

[RoaminRed]

Originally Posted by nic529

People running away from their issues and trying to scam others is why our economy is where it is today. If your friend goes through with this not only will his credit be ruined for a very very long time, but as another poster said they could actually go after the new house. This is just stupid. Lots of people are in this situation right now - those of us who are responsible adults will work through it and hope things get better - but with idiots like this guy its gonna take a lot longer.

This is the 4th thread I've seen on people thinking about "letting" their homes go into foreclosure.......what is wrong with people!

It's the overwhelming mentality nowadays that Big Brother Government is there to hold your hand and make all your stupid mistakes disappear at no cost to you.

It's the same mentality as people who live in a flood zone (or any other disaster-prone area), but don't bother to buy flood insurance have. When they get flooded out, they whine and they cry and they expect a freebie from the government even though all the signs and information were in place to allow them to protect themselves...and THEN a bunch of them turn around and rebuild right in the same area and STILL don't get insurance. ????

[sskkc]

Has no one here ever heard of a 1099-C? It's a real bit**. I read a lot of posts on this
forum, but I wonder why no one ever mentions this bit of prime legislature.

Kudos when "your friend" pulls off getting the new house. I'd love to see his face though when a 1099-C shows up for $80K+ and drives the amount he owes the IRS to $20K+ this year. Then "your friend" can come on here and complain about how the IRS is screwing him over.

[RoaminRed]

Originally Posted by sskkc

Has no one here ever heard of a 1099-C? It's a real bit**. I read a lot of posts on this
forum, but I wonder why no one ever mentions this bit of prime legislature.

Kudos when "your friend" pulls off getting the new house. I'd love to see his face though when a 1099-C shows up for $80K+ and drives the amount he owes the IRS to $20K+ this year. Then "your friend" can come on here and complain about how the IRS is screwing him over.

Shhh...let him think he can get away with it, and just keep that bit of info to yourself.

[missyM]

I wonder - what makes the friend think the second house isn't going to lose value?