Some homeowners are buying new homes only to let their current home go into foreclosure. They may be able to buy a better home and have a lower payment than the home they currently feel "stuck" with because they're $200,000 upside-down.
So while their credit is still good they buy another home and then try to short sale or just walk away from the first home. Should they keep paying $3500 a month when they can pay $2500 for what might be a nicer home? Is it fraud or just a good business decision?
Revised Fannie Mae guidelines which could go into effect next week may make the buy and bail more difficult by requiring supporting evidence that the borrowers can continue to pay both mortgages, but will that really stop someone who chooses to bail? and is that a choice they should be free to make?
What do you think?