Had a friend who bought during the peak in Murrieta – a $600k house with 100% financing. Market crashes and house declines in value to $300k. They ‘strategically default’ and somehow partake in one of the mortgage modification programs and the bank reduces their balance to $300k and lowers their interest rate.
Low and behold, the market recovers and they just sold their house for $500k, rolling over $120k into a new and improved $600k home and…wait for it…cashing out $80k into the bank! All while driving Bimmers and taking Hawaii vacations.
