in my original assumption, I”m assuming the person who pulls this off has a solid job, currently has strong FICO scores, and has not refi’d the existing house….
So…they have a large income, they can go full doc – and prove income.
so you wind up “lying” and claiming your existing home is rented out, you generate a rental contract with someone you know, or a straw, who signs up for the rental, at a high monthly rate – so that the bank thinks the existing home is rented – and then qualify for the new house.
i have a buddy who was buying home #2, and had house #1. he lived in #1 and did bogus docs showing house #1 was rented out. it was all fake. he then qualified for house #2, bought it, moved in. THEN he put #1 up for rent and just burned up savings until it really rented. he had to carry it a couple of months, but he pulled it off…but he did LIE on his app by claiming it was rented….he had a rental contract executed, by a real person buyt all involved knew it would be torn up the moment his loan closed on #2.
i don’t see why people won’t pull this in the upcoming crash.
heck, if my house is suddenly worth a fraction of what I paid for it…and I could buy the SAME type house, or hell, a BETTER one for LESS money, you think i’d sit in myhouse and essentially waste money… i think you will see peple lining up to dump their house and let the bank have it.
assuming they have the income/docs/etc to qualify for house #2.
or people will draw up fake escrow papers and claim their house is already sold and in escrow. what would stop me from having a purchase agreement with say…my SISTER…who signs up to BUY my house…it goes into escrow…I quality for house #2 b/c bank thinks house #1 is selling…and then approve you for new house…then after the fact #1 “falls out”…or would they demand it actually close before they funded #2?
if people did this in the 90s, they will do it again and there will be a way. maybe some people won’t have the $$ or the ability to do it, but if there are some people who CAN do it, and it makes financial sense to do it, whether it is the “moral” or “right” thing will be out the window. money is money and people will sell their soul for it.
