Most people that are in trouble can barely qualify for the loan that they have. With a DTI of 50% +/- it is VERY unlikely that most people can buy another house with their current mortgage debt on their credit report.

Even if they want to lie and claim that it will be a rental, they have no rental income to offset the additional PITI debt, and will have to qualify for ALL of the debt on both houses.

You would have to have substantial full doc income to pull it off. It’s not impossible, but not likely for most.

If the loan gets qualified for by somebody else who doesn’t already have mortgage debt, that’s a different story. Could be a spouse or other family member etc, who isn’t on the current loan. They would still need to qualify.