Many Homeowners “Buying and Bailing”
We’re seeing a rising number of Phoenix real estate and Scottsdale real estate owners take advantage of a tricky loophole in the home loan industry. Faced with a home that’s worth less than what’s owed and with a plethera of lower-priced, more attractive alternatives, many homeowners today are purchasing a second home while their credit is still good and then defaulting on payments for their original home.
Once they quit making payments on the original property to finance the new one, they are served with a notice of default. Whether they’re successful with a short sale of the first property, where the lender agrees to accept a sales price that’s less than what’s owed, or they end up being foreclosed upon, they acquire a superior property at the same or even lower monthly payment, in exchange for a temporary black mark on their credit.
Some people I’ve talked to call this loan fraud while others call it smart economic decision-making.
What do you think?