Buy and Bail
With rising gas costs, food costs, traffic concerns- some homeowners are practicing “buy and bail” tactics. Qualifying for a new home, claiming your existing home will be used as a rental, close on the new home and then abandon the “investment home”
This happening in already distressed neighborhoods, further driving home values down and in my opinion is fraud-But that’s another issue. The bottom line it leads to yet another foreclosure in the Queen Creek Area.
FHA Underwriting guidelines changing
Amy Swaney from Artisian Mortgage highlights some of the changing criteria:
“Effective for Case Number’s assigned on or after 9/19/2008, rental income from the property being vacated may not be considered for qualifying.
EXCEPTIONS**:
Rental income on the property being vacated may be used to offset the current mortgaged by 75% of the lease amount under the following circumstances:
- Reclocation: The homebuyer is relocating with a new employer, or being transferred by the current employer to an area not within reasonable and locally recognized commuting distance.
- Sufficient Equity in Vacated Property: The homebuyer has a LTV of 75% or less, as determined by either a current (within 6 mos) appraisal or by comparing the unpaid balance to the original sales price of the property. The appraisal may be exterior only.
- **Note:For scenarios that are eligible for an exception, a fully executed 12 mos lease agreement along with evidence of the security deposit or first month’s rent was paid will be required.”
From the U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT: FHA Underwriting Guidelines
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