Jan 28, 2008 10:49 am US/Pacific
'Intentional Foreclosure' A Growing Trend In Sacto
Linda Caoli helps lots of families on the verge of losing their homes, including a single mom working two jobs to pay her mortgage.
That mother told Caoli that the upgraded house across the street sold for less than her home as part of a foreclosure. That left Caoli's client considering a move to upgrade her home, and perhaps save some cash.
Her client isn't the only one thinking about ditching her house to buy the better deal across the street. A number of Sacramento realtors said it's already happening.
"Can you imagine if you had a same or similar home and your mortgage was half the price?" asks Caoli.
Here's how it might work. A homeowner paid $420,000 for his home. Then notices the house across the street, with more upgrades is selling for $315,000.
The buyer, 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.
But the process does raise some ethical issues.
"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," said Linda.
Caoli is sympathetic, but she doesn't endorse the practice. 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.
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