By Gerri Elder
It's a buyer's market - even for homeowners who are facing foreclosure.
ABC News recently reported that there is a growing "buy and bail" trend among people who are facing foreclosure and owe more than their homes are worth. These homeowners simply move on and buy new homes and let their abandoned homes go into foreclosure.
The nationwide mortgage foreclosure crisis, tightened credit markets and poor economy have caused home prices to plummet, with some experts saying that they could go significantly lower before hitting rock bottom. Because of the glut of foreclosed homes on the market and sluggish sales, people who are looking to buy a home now can find some great deals.
At the same time, many homeowners who are facing foreclosure now owe far more than their homes are worth. As home prices continue to sink, homeowners who are in adjustable rate mortgages have seen dramatic increases in their mortgage payments. These homes cannot be refinanced because they are not worth the amount of money that is owed on them.
So some homeowners who feel stuck in a losing proposition with their current homes are opting to abandon them and let the banks foreclose on the properties while they purchase bargain-priced new homes. Since they cannot afford the mortgage payments on their original homes anymore, some feel that this is the best - and sometimes only - option.
After bankruptcy and foreclosure, credit scores have to be rebuilt. So these homeowners who are still able to purchase new homes with fixed rate mortgages before foreclosure on their existing adjustable rate mortgages feel that "buy and bail" is the way to go in order to still own a home. After their homes are foreclosed, they feel that they may no longer have the option to buy a new home.
In order to purchase new homes, some homeowners deceive banks into thinking that they plan to rent out their first homes. This deception comes with a great risk, as it is illegal to lie on a mortgage application and is considered mortgage fraud. Others are able to get new mortgage loans by putting the debt under a spouse's name.
In these desperate times, many people seem to be willing to do whatever it takes. If "buy and bail" is the only option for home ownership, that's the route that will be taken.