Will honest people start doing dirty/crooked things to bail out of their houses

[patientlywaiting]

Very easy to get another purchase mortgage. Just tell the lender you are in the process of selling the old house so it won’t be a liability anymore.

That’s how people normally obtain loans when they move up. The lender then ignore the current mortgage in the underwriting process.

[Ex-SD]

It’s not that easy anymore. Getting a loan for another home while you still own the present one will be difficult. The bank will still count the obligation for the first home towards your total debt.

[Ex-SD]

It’s not that easy anymore. Getting a loan for another home while you still own the present one will be difficult. The bank will still count the obligation for the first home towards your total debt.

[patientlywaiting]

ex-sd, that’s news to me.

If you’re right, that will kill the move-up market as well. Are move-up families going to have to sell, rent then buy?

[patientlywaiting]

ex-sd, that’s news to me.

If you’re right, that will kill the move-up market as well. Are move-up families going to have to sell, rent then buy?

[Ex-SD]

I’m not talking about a vacation home. I’m talking about a primary residence. If someone is planning on throwing the keys back to the lender and attempts to buy another home in the same general market, the lender isn’t going to believe that it’s a vacation home. They would buy off on the idea of it being a rental but then they’re going to want to see a substantial down payment and a full-doc loan now that liar loans are out the window.

Any mortgage pros want to get in on this and correct me if I’m wrong?

[Ex-SD]

I’m not talking about a vacation home. I’m talking about a primary residence. If someone is planning on throwing the keys back to the lender and attempts to buy another home in the same general market, the lender isn’t going to believe that it’s a vacation home. They would buy off on the idea of it being a rental but then they’re going to want to see a substantial down payment and a full-doc loan now that liar loans are out the window.

Any mortgage pros want to get in on this and correct me if I’m wrong?

[patientlywaiting]

ex-sd, I’m no expect on this matter so I don’t pretend to know more than you. Just thinking about the possibilities here.

I was talking about a family who wants to move up to a better house in the same general area. They can buy a new house with a contingency that they sell the old one first, or they can buy the new house then sell the old one later. It would work the same for a family that is downsizing.

How can the lender divine what the “real” intention of the buyer is assuming that he is otherwise a rock solid borrower.

[patientlywaiting]

ex-sd, I’m no expect on this matter so I don’t pretend to know more than you. Just thinking about the possibilities here.

I was talking about a family who wants to move up to a better house in the same general area. They can buy a new house with a contingency that they sell the old one first, or they can buy the new house then sell the old one later. It would work the same for a family that is downsizing.

How can the lender divine what the “real” intention of the buyer is assuming that he is otherwise a rock solid borrower.

[23109VC]

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.

[23109VC]

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.

[gn]

23109VC,

Are you thinking of a possible exit strategy from your current house in case the market in Temecula collapse ?

[gn]

23109VC,

Are you thinking of a possible exit strategy from your current house in case the market in Temecula collapse ?

[DaCounselor]

I don’t think there is anything dirty or crooked about someone allowing their home to go into foreclosure, even if they can afford the payments, because the value has dropped dramatically. It’s probably not a good strategy for someone who re-fied, but for someone with 80/20 non-recourse purchase money it may make sense. The mortgage contract is pretty simple – the buyer agrees to make payments as described, and if they don’t the lender(s) take the collateral. That was the deal. If the poor 2nd gets wiped out, oh well, that’s show business. That’s what you risk when you go 100% ltv as a lender. You don’t want the risk, don’t lend the money.

Forging rental agreements and fake escrows are a whole different story. Such activity is dirty and crooked and fraudulent, and there is probably going to be plenty of it.
But what can you expect when there are potentially hundreds of thousands of dollars at stake? The way I see it, if otherwise straight people were inclined to fib on the stated income deals that got them into trouble in the first place, they will probably be willing to do the same again to get out of the old deal and into a new one.

[DaCounselor]

I don’t think there is anything dirty or crooked about someone allowing their home to go into foreclosure, even if they can afford the payments, because the value has dropped dramatically. It’s probably not a good strategy for someone who re-fied, but for someone with 80/20 non-recourse purchase money it may make sense. The mortgage contract is pretty simple – the buyer agrees to make payments as described, and if they don’t the lender(s) take the collateral. That was the deal. If the poor 2nd gets wiped out, oh well, that’s show business. That’s what you risk when you go 100% ltv as a lender. You don’t want the risk, don’t lend the money.

Forging rental agreements and fake escrows are a whole different story. Such activity is dirty and crooked and fraudulent, and there is probably going to be plenty of it.
But what can you expect when there are potentially hundreds of thousands of dollars at stake? The way I see it, if otherwise straight people were inclined to fib on the stated income deals that got them into trouble in the first place, they will probably be willing to do the same again to get out of the old deal and into a new one.

[Author]

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