New Trend In Sacramento: 'Intentional Foreclosure'

[Joseph Burkeson, CMI]

You have just got to love those inventive Californians thinking up never ending ways to screw the pooch.

New Trend In Sacramento: 'Intentional Foreclosure'

Reporting
Koula Gianulias
SACRAMENTO (CBS13) ― Linda Caoli helps lots of families on the verge of losing their homes, including a single mom working two jobs to pay her mortgage.

"She says Linda the house across the street, same model, with more upgrades sold in foreclosure for $315,000!" explains Linda.

Her client isn't the only one thinking about ditching her house to buy the better deal across the street. A number of realtors CBS13 talked to say it's already happening.

"Can you imagine if you had a same or similar home and your mortgage was half the price?" asks Linda.

This is how it works. Bob paid $420,000 for his home. Then he notices the house across the street, with more upgrades, and is selling for $315,000.

So Bob, who has pretty good credit, decides to buy the cheaper house. He can't afford both, so then he walks away from his original home, letting it fall into foreclosure. That will hurt his credit, but he's willing to take the hit for a more affordable home.

"Is it wrong to steal when you're hungry? That's an issue that a lot of people are trying to figure out right now," says Linda.

Caoli is sympathetic, but she doesn't endorse the practice of it. Other real estate agents we talked to were far more critical, calling them cheaters. They say the banks take a huge hit when their homes foreclose, and in the end, we all end up paying the price.

(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)

[Larry D. Kage]

Originally Posted by jburkeson1

You have just got to love those inventive Californians thinking up never ending ways to screw the pooch.

New Trend In Sacramento: 'Intentional Foreclosure'

Reporting
Koula Gianulias
SACRAMENTO (CBS13) ― So Bob, who has pretty good credit, decides to buy the cheaper house. He can't afford both, so then he walks away from his original home, letting it fall into foreclosure. That will hurt his credit, but he's willing to take the hit for a more affordable home.



(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)

How does he get a mortgage on the second (cheaper) house? I thought the lenders tightened the reigns.

[Joseph Burkeson, CMI]

House Of Cards Steve Kroft reports on how the U.S. sub-prime mortgage meltdown, in which risky loans drove a housing boom that went bust, is now roiling capital markets worldwide.

[Brian E. Kelly]

Ah the "Free Market" at it's best. Beautiful.

[whandley]

What goes up, must come down.

And go back up again!

Buy, BUy, BUY!

[Nick Gromicko]

It might not even hurt his credit. Many banks are now just writing it off and not chasing the money or harming the borrower's credit rating.