Mesa, Arizona - The Buy and Bail Scheme Is Still Alive And Well!!!

Very good discussion!  We need to be very aware of every new scam that comes down the pike. ~JC

I couldn't agree more with you Teri. It is not worth one commission and my LICENCE to do such unethical behavior.

I am late to the party on this one but at least you did the right thing.  I still see a lot of that happening and it is tough to differentiate with what people are really planning to do at times.  But my rule of thumb is that if it seems fishy, it usually is, so get out of there.  Thanks for the reminder.

You are so right Teri. There are so many people in our culture who don't worry about the consequences of their actions and that is a big part of what created the financial mess we are in now!

Buy and bail - a pretty slimy approach to business or life. BTW, I love your use of color and different fonts!

Thank you.  I am a broker and get very frustrated when I am brought the financing side of these deals and the borrowers act like it is no big deal.  We all need to be strong enough to shut them down and walk away.  I applaude you and please continue to stand up to these individuals. 

I have a number of people present me with similar situations that appear to be basically the same deal.  They come in several different cloaked forms so its not quite as easy to detect that amount to the same thing.  I agree, it is not worth the potential money, to be dishonest.  Apparently there are some out there who are either un eduacted & don't know, or don't care, I'm not sure which.

I have had at least a couple people who wanted to buy a new smaller nore affordable house & attempt to rent their way upside down house.  Since the potential rent would be not near enough to cover their mortgage, what do you think the next step would be?  This might not be as clear, but could still get an agent in potential trouble down the road in case that rented house defaulted.  I suggested looking into a short sale for these people, but they declined. 

I think banks are on to this pheniomenon. They started cracking down about 2+ years ago, but you can typically buy a 2nd home if you have the down payment and at least 6 months of PITI in reserves for both places. This is still not going to stop someone who owns a home that they owe $450k and it is worth only 300K when they can find a home that was worth 900K and now buy it for 500K. They are getting way more house for the same current moeny and they have the cash reserves to do it. I have seen it done recently and the lenders are allowing it because the buyer's profile looks pretty good. It is still a sham though, Jason

www.SearchAZmls.com

I had 3 situations this year that were buy and bail. It is surprising how enrolled the people are that this is the solution. One RE agent told me he called his attorney and the attorney said no one would ever come after him for this. I told him he was a future client for the Attorney, nothing more. It got me black balled from his RE office....Oh Well

Teri, Thank you for the way that this was handled. On the lending end we also have our antenna up. There are comprehensive criteria to meet when buying a new home with an existing home in place now. You would think that this would create another level of protection against these types of transactions, but buyers are apparently able to find lenders that essentially look the other way. This is part of the open door. I don't wish to be a policeman, and I certainly want to create new business, but if this profession has learned anything, it's that the integrity of the entire system starts and ends at the front lines. Thanks again.

Teri, Thank you for the way that this was handled. On the lending end we also have our antenna up. There are comprehensive criteria to meet when buying a new home with an existing home in place now. You would think that this would create another level of protection against these types of transactions, but buyers are apparently able to find lenders that essentially look the other way. This is part of the open door. I don't wish to be a policeman, and I certainly want to create new business, but if this profession has learned anything, it's that the integrity of the entire system starts and ends at the front lines. Thanks again.

Hi Teri,  I  just finished the first of a series of four blogs where I will detail the guidelines to enable an underwater homeowner to legally convert their current residence into a second home or an investment property.  Being here in Arizona I get those calls every day or so.  You might find it helpful to know the lenders rules to make it happen.  Here is the link: http://activerain.com/blogsview/2365494/how-to-get-out-of-your-underwater-house-and-live-to-tell-about-it-.  Check back with me next week for part dos.  I hope you find this helpful. 

I look foward to reading your series on guidlines Teri. 

Teri,

Thank you so much for sharing this. I have been appalled at this practice ever since I first heard people were doing this. Really, just dump your responsibility for one home and walk away from your obligation and walk right into another home! I really hope Realtors will not assist people in these transactions.

Ann DeWolf

ADT Security

Unbelievable that this is still happening.  That agent knew, or should have known, and was only looking to get paid.  Amazing!