What is going to happen to all these people who are purchasing new homes and letting their old homes go? I mean if they write a hardship letter and the Bank accepts isn't that still considered fraud?

Are they going to have to pay a deficiency for the difference. Is that something that is negotiable with the bank or are they going to get a 1099 at the end of the year?

If the same agent who sold them the new home short sales their old home are they committing fraud? Very confusing.

Thanks

bump anybody :(

Its not fraud or illegal to buy a new home and let the old one go.
If they qualify for both loans - so be it.
Can they be sued by their former lender for a deficiency? Maybe. maybe not. Depends on a lot of things.
In any situation - the agent has done nothing wrong.

IMHO if the bank for the first loan finds out the owner bought a second home then walked on the first one they are going to go after a judgement.

We had one customer who had to put up $10K at closing and sign a $50K note (10 years at 0% apr) to get it approved.

They are P!ssed at us because they did not expect the bank to hit them so hard but they had other assets and the bank was not going to just roll over.

How are they going to buy a home if they've conducted a short sale?

The idea is that they buy a second home prior to walking away from the first one that is underwater.

I do not think so it is such a kind of fraud or illegal act. If a person qualify for both of the loans then no one should have a problem with that. It is possible that people consider it a nice and safe way to loose some burden.

If they have a new home with equity in it, the lender for the old home will likely ask them to pay the deficiency on the old home loan upon the short-sale.

Definitely smells like fraud to these nostrils.

I don't care how you paint the picture, if they lied to either lender then they are committing mortgage fraud. You just better be sure that you are not a party to the deception. I fail to see how anybody who can qualify for 2 mortgages can prove a financial hardship without lying to somebody.

There is all ways a financial hardship. The fact that your property value is worth less now, than when you purchessed the home, is a financial hardship. Another financial hardship is a decrease in your assets. Also, keep in mind that these hardships create other hardships. Mental stress. Most all americans have financial hardships. As far as borrower lying to the lender. You need to do a paradym shift on that. I hope this helps you. Thanks for letting me reply.

You are right in the fact that buying another home does create a different financial hardship. The key is what you tell the bank. If it is all true then no fraud exists. We had a couple who wanted to purchase their parents home after their parents passed away and use their present home as rental. The wife purchased the home in her name. 6 months later the wife loses her job and they have to evict the tenant for non-payment. That created a new hardship and Bank of America approved a short sale on the rental home. They even gave the sellers a $1000.00 incentive. Just be truthful. If you have to lie then walk away from it.

No,no,no, the fact that your house is underwater is NOT a financial hardship!