I found an interesting article explaining a shocking trend that has emerged due to the troubled housing market. You can read the full article here. Apparently this trend, called “buy and bail”, is a strategy for cutting the losses taken by homeowners that have found themselves in large, negative home equity positions due to the housing market crash. To sum it up, current homeowners with good credit and incomes get approved for financing to buy a second home. Once they purchase this second home, they stop paying the mortgage on their first home and default on the loan. This way they get a new house at the current low rates and low purchase prices and avoid paying the mortgage on their first home which has lost significant value during the housing crash. While this is an interesting strategy, it is fraud. Things are getting crazy out there.
- Martin
