In Foreclosure? Buy a Second Home
'Buy and Bail' Is the Answer Some People Have Found to Threat of Losing Home
So how do people get a loan for a new home when they are barely making payments on their current one? In many cases they tell the bank they plan to rent out the first house, or they put the second mortgage under a spouse's name.
"Desperate people do desperate things and again, we're at a point now where the relationships between the borrowers and lenders really seem to have devolved into a survival of the fittest mode," said Rich Sharga, a spokesman for RealtyTrac, an online marketplace for homes in foreclosure.
However, buying and bailing is not for the most desperate. For homeowners who may have lost their job or are behind on payments, it is doubtful that a bank would give them a loan solely to purchase a new home.
Some lenders call the practice deceptive, even fraudulent, and they are fighting back. Fannie Mae has already imposed stricter guidelines for approving a second mortgage and other companies are expected to follow.
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