With many homeowners still underwater on their mortgage, buying a new home and then foreclosing on the old one (Buy and Bail) is still tempting to many. The mortgage lenders were onto this “strategy” years ago and in 2008 they changed the mortgage qualification rules to deal with the problem.
The new rules may have reduced the practice some, but as with many things in life – if there is a will there is a way. From the Washington Post:
“There were a number of policies put in place to squelch this type of activity, but people who are savvy can always find a way to circumvent policies,” said Burns of the Federal Housing Finance Agency, which regulates Fannie Mae, Freddie Mac and the 12 federal home loan banks.
If you are thinking about doing this, be aware that you could be committing mortgage fraud. also, the lender could come after you for any losses they incur.