What's up with the Buy and Bail Strategies??

Do some here feel that it's legal?  Unethical? Or, just a downright bad decision?  I'd be interested to hear how lenders feel about this. 

 

I know that there are hardships, transfers and variences granted, but does this fit into those categories?

 

In the last 2 months I've witnessed 2 buy and bail short sale strategies put into play.  BTW, no relations, just an accquaintence and a person I just met.  One, that I can give specifics on involves a middle aged couple just getting married and already mortgaging 2 separate residences with one spouse with teenagers about to leave the nest.  So, they go out and buy another much, much larger home for all.  Now, with 3 homes and only being able to afford 1, they are trying to short sale the 2 original homes.

 

In the other case, the individuals know better........they're in the real estate profession. 

 

Excuse me but, I just don't get it!!  What an I missing here?  Don't they know this ends up costing others, especially if they have to foreclose or bankrupt?

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Permalink Reply by Isabelle Javier on September 19, 2011 at 8:19am
I agree. The banks and our government who aided the mortage industries illegal practices by providing zillions in bail-out funds are the culprit. Not the poor schmuk who's house is underwater by 60%.
Permalink Reply by Beth Johnson on September 20, 2011 at 12:32pm
If the individuals are real estate agents....is there liability for the broker?
Permalink Reply by Richard on September 20, 2011 at 1:30pm

Hi Beth,

 

That's a very interesting question and not being an agent myself I can't answer that.  I'm sure the professional here will weigh in on this.  However, I do know that it is a real estate agent/broker and another agency is handling the short sale. 

Permalink Reply by joe beauchamp on September 20, 2011 at 6:45pm

Beth, I would say absolutely not - Think about the situation - a new mortgage co went all over these buyers' credit - they know that they own these other houses and in their own best interest decided that they are good risks for buying a house.  They have much more responsibility, data and tools available to check out the situation than a real estate agent.  If they said it is cool, what responsibility or RIGHT does an agent or broker have to screw up the deal?  Doing that would make them liable to a suit from either or both the buyers and/or their new mortgage co.

Even a simple form signed demanding that the buyers will not attempt to short sale their current properties for X years would add a lot of responsibility to the buyers - nobody did that, right?  If they don't care, where does the real estate agent have the right to interfere?

Personally, ethically, I don't like this sort of thing, however, the mortgage association did this very thing this year - to their own mortgage co for their offices, hard to (un-2-faced) point the finger, as they do, to individuals doing the same thing to cut their losses in even a more personal way, right?  And, what big chunk of mortgage brokers made a ton of cash and walked away (last count, 0 put in jail) after knowingly giving mortgages to people who clearly could not pay for them for 20 to 30 years?  How many people don't feel a little bit, at least, that the bank ruined their future with these mortgages?

Not nice, but sure does seem like the personality of America these days, sadly..

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