Wait, hold on… say what?! I keep hearing all these crazy schemes people are coming up with to get out of their difficult financial/real estate situations. Here’s the newest one on InmanNews “Seller’s plan to avoid short sale may be illegal“. Inman’s Ilyce Glink and Samuel Tamkin respond to a couple’s (we’ll call them Couple X) question about a proposal their friend (we’ll call him Friend Y) has made. Friend Y has a $770k mortgage on a home that is now worth $700k. Friend Y wants Couple X to buy his house for $770k with an interest-only loan and then he would pay off, in time, the $70k. Couple X wonders if this plan is illegal.
The answer? Well, yes, it’s probably illegal. In essence Couple Y would be buying a house for $700k sales price but lying to their lender. I would wonder how they could even get a loan for $770k if Friend Y doesn’t think he can sell it for that amount.
Here’s another crazy one for you. I found this one on the LA Sweet Digs blog. Cindy Allen’s post “Is it OK to Walk Away?” highlights a case where a woman is planning to foreclose on her condo. She feels that she has the right to do so because it’s just like what big businesses do when they find themselves in similar trouble — close up shop and file for bankruptcy. I was understanding her side of the story until I read that she is in escrow on another house. Basically, she decided she could get a lot more house for what she was paying now, so why not walk away from a bad investment and move into another? She’s waiting to be delinquent in payments and go into foreclosure until she closes escrow on the new house (doesn’t want bad credit just yet).
Now, why do I get all worked up when reading these stories? Is it that I feel like these people are being irresponsible and poor contributing members to society? Or, is it that I’m secretly jealous that I don’t have “the guts” to do the same thing? What about you? What side of the fence do you fall on?