I had heard rumors of people in this market buying a second home and then letting their first home go into foreclosure, but until today I didn't know that it actually has a name associated with it: buy-and-bail.

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The practice is obvious loan fraud, and mortgage lenders appear to be cracking down on it.

What happens is that the owners tell their lender that they plan on keeping their first home and rent it out, thereby providing rental income that gets included as part of their income to qualify for the second home. Once they close escrow, they simply quit paying their first mortgage and let it go into foreclosure.

The reason why some owners are choosing this route is because they can buy the same size home, possibly even a bigger one, at a lower price than what they owe on their first home. I don't understand why they wouldn't just re-finance their first mortgage rather than have a foreclosure on their record. Maybe someone he can shed some light. Anyway....

It seems that lenders are adding some restrictions to practically eliminate the buy-and-bail practice. Unfortunately, that makes it difficult for honest owners to actually move up to a larger house, with prices being so low, while keeping their first home, and renting it out, until market conditions improve sometime in the future. Notwithstanding what The Osmonds sang, sometimes "one bad apple" does ruin the whole bunch for everyone else.

Some of Jim's blog entries

1. Is it okay to climb a tree on someone else's property?
2. Is 13 YOUR lucky number?
3. Representing two buyers on the same property simultaneously
4. Slow down, look around, and pay attention
5. Are you as drunk as a bee?
6. Are you a food label reader?
7. Pets are wonderful support, but not very good drivers
8. Do you prefer roses or rotten eggs?
9. San Diego Plant Atlas is now online
10. The common sense gene is missing from the gene pool
11. Is there a conflict here?
12. You mean I've been subsidizing the sports stars?
13. We could learn from history if we'll just take time to study it
14. Excessive furnishings and storage create fire hazards
15. Is Active Rain trying to tell me something, or am I just weird?
16. Make every Friday "Backup Friday"
17. STOP THE INSANITY!
18. If you can't get to it, you can't tell how old it is
19. Your digital camera can do so much more than just take pictures
20. It's hard to believe Zoey's already been here a year
21. It's hard to believe Sophie's been gone a year
22. Is THAT the house?
23. Don't trust, do verify
24. The benefits of staging, even minimalist staging
25. Please help me identify this type of architecture. Craftsman? Victorian? Modern?
26. Southern California fire season is just around the corner
27. Welcome to my home
28. If you could easily get rid of your child, would you?
29. Wow! Nice underwear
30. There obviously is no financial crisis if Zoey has been pre-approved for a $5,000 credit card
31. Getting to cold contacts. It's all in the approach
32. Is there trash in your trash can?
33. Private, gated, fenced, coded subdivisions
34. What's in a name?
35. Location, location, location? Ha! Views, views, views
36. Oh give me a home, where the buffalo roam
37. Did you put that on the disclosure form? "I didn't think I needed to."
38. If you needed to hide from someone, could you do it in today's world?
39. A home is like a child
40. Should I stay or should I go now. Remodel or move?
41. Water, water everywhere, or is it?
42. Always on the lookout....
43. Are you prepared for an emergency?
44. Four secrets to getting and keeping online customers
45. Holding an open house with fleas
46. Tuesday laugh session with the "treadmill kitty cats"