Mesa, Arizona - The Buy and Bail Scheme Is Still Alive And Well!!!

Recently I received a telephone call from a Realtor from another state. He introduced himself, told me he had found me through Active Rain, and knew so and so, and so and so - yada, yada......

After we had finishFor Saleed with our introductions, he told me he had a client that had a home in Mesa, Arizona, and they wanted to find someone to list it for them.  As I began to question him on the circumstances of the sale, he said that the sellers just “needed” it listed. I prodded him further asking if they had taken out a second and if they were upside down. He said, "yes," and basically needed it listed in order to complete their purchase of a home through him.

He further went on to tell me that they didn’t really care whether they sold it or not, and heFraud didn’t need a referral fee. Sound fishy? Yep, to me it did – and it was.

I told him this: “they are buying another home and bailing on this one,” aren't they? He hemmed and hawed, and pretty much acknowledged this to be true - actually he "thought" it "might" be the case, but “he didn’t know for sure.” 

I told him that it is mortgage fraud  knowing when you purchase one home that you are walking away from the other one!! You see, I have very strong feelings about this type of mind set. (See my previous post written in June 2008 on the Buy and Bail phenomena.)  NO WONDER we are in such dire straits in America!! Guess who picks up the tab? US!!! People don’t think twice about their obligations to keep their promises – AND – this agent had never heard of the Buy and Bail scheme. Maybe yes, maybe no!! Hopefully all Realtors are aware of this egregious behavior and DO not assist buyers/sellers with transactions of this type.


Mesa, Arizona Real Estate. Call me at: 480.216-3334 for information on purchasing or selling a home in Mesa, Arizona or surrounding towns. OR email me: Feel free to visit one of my websites:, ServingMesaArizona, or Or stop by my blogs at: MesaAzRealEstateVoice; or Phoenix Valley Real Estate Blog

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Mesa, Arizona Real Estate. Call me at: 480.382-8711 for information on purchasing or selling a home in Mesa, Arizona or surrounding towns. OR email me: Feel free to visit my website:, or stop by my blogs at: MesaAzRealEstateVoice and AzLadyInRed!


TERI, I thougth that lenders were coming down hard on buying a house when you had another one.  I'm with you that just not seem right!!

Posted by Marchel Peterson, Spring TX Real Estate E-Pro (Results Realty) almost 11 years ago

Why would this guy think you would spend your time to list a home and not sell it.

Posted by Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239, Michigan homes for sale ~ (Real Estate One) almost 11 years ago

... it's just amazing that this is still going on ...

Have a nice evening Teri !

Posted by Sheldon Neal, That British Agent Bergen County NJ (Bergen County, NJ - RE/MAX Real Estate Limited) almost 11 years ago

Marchel, I am sure they are. In order for this sale to "go through," their home here had to be on the market! That's why I was being asked to do this little task, and then I could represent them in a short sale. ;-)

Russ, exactly!!!

Sheldon, I couldn't believe the guy hadn't heard of is generally so transparent. ;-) You have a nice evening too Sheldon. ;-)

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

Teri, I am shocked, I have not run into quite that scenario yet. But had something happen today that gives me pause.... Now I will be on the lookout! Thank you!

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) almost 11 years ago

There will always be scammers, schemers and criminals because they are lazy and live off others.

Posted by Monika Depalo, REAL ESTATE Agent/Stager (GAFF'S REFERRAL'S INC.) almost 11 years ago

Andrea, it was rampant here last year. I thought maybe it had "settled" down, but I guess not.

Monika, it appears as though you are right unfortunately.

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

Amazing that this stuff is still go on.  Unfortunately it is a symptom of precipitous home value declines.

Posted by Mark MacKenzie almost 11 years ago

Teri, The banks I have dealt with want a sales contract not a listing contract.  They will not loan on another house unless the first house is under contract. Sometimes they want it to close first.

Posted by Bonnie Vaughan, CNE SFR - Buyers/Sellers - Lackawanna & Surroundin almost 11 years ago

Mark, sometimes - but many times I'm seeing that people are just doing it 'cause they can.

Bonnie, I would think you're probably right. I really didn't go much further in the conversation since I suspected I was being "had." ;-)


Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

Glad you saw thru this one -- they do come out of the woodwork don't they?

Posted by Bob & Carolin Benjamin, East Phoenix Arizona Homes (Benjamin Realty LLC) almost 11 years ago

Bob and Carolin, it felt strange from the beginning.....I won't even work with a buyer who plan to do that. ;-)

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

Hi Teri!  Aren't you glad that you asked the right questions?  I would not touch that one with a 10-foot pole, even if it were a $1M property with 10% commission!!  We have heard of similar scams where the short sale agent lists the home and then sells it to an investor who is in cahoots with the seller; they turn around and flip the home and then split the profit.  It seems that after all we've been through with this crisis, people are still finding away to scam the system.

Have a wonderful Wednesady...

Posted by Debe Maxwell, CRS, The right Charlotte REALTOR! ( | The Maxwell House Group | RE/MAX Executive | (704) 491-3310) almost 11 years ago

Hi Teri -- Thanks again for bringing this to the forefront.  No transaction is ever worth doing anything illegal.  I truly don't know how people sleep at night when they do these sorts of underhanded things.

Posted by Chris Olsen, Broker Owner Cleveland Ohio Real Estate (Olsen Ziegler Realty) almost 11 years ago

Hi Teri! Did you hang up on him? They probably did find another Realtor to list it. Sad.

Posted by Lizette Fitzpatrick, Lizette Realty, Lexington KY MLS - Kentucky Homes (Lizette Realty - Richmond KY) almost 11 years ago

Debe, it just felt a bit over the top when he started saying they didn't care if they sold it, it would probably be a short sale, etc.

Chris, I just cannot believe this Realtor didn't know what was up - but maybe not, we never know. ;-)

Lizette, I didn't hang up on him - I counseled him about it being fraud...;-)

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

Beautiful new pic Teri!

I don't blame you - who wants a listing the sellers don't care if they sell or not in the first place . . . and to top it off aid/abet in a buy/bail? Nah.

Posted by Candice A. Donofrio, 928-201-4BHC (4242) call/text (Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker) almost 11 years ago

Teri ~ This is a scary thought.. Someone recently contacted Wendy in Florida wanting her to list a short sale so he could buy it then flip it... Either way.. Not good juju

Posted by Roland Woodworth, Q Realty - Power In Real Estate (Q Realty) almost 11 years ago


Thanks for the heads up....and thanks for a great blog to keep us on our toes...

Posted by Lori Churchill Cofer, Realtor - 509-330-0086 - Pullman, WA (Beasley Realty) almost 11 years ago

Teri- This goes on all the time.

But what I like even less is when a seller lists his short sale with us, then starts to make up all kinds of reasons why it can't be shown, come to find out, they hired an attorney who tell them for a fee he can keep them in their home for up to 2 years and they don't even have to make their mortgage payments anymore. At least the the bail and buys are moving product in the market. :) I'm just saying...   Katerina

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) almost 11 years ago

Terri - Pretty amazing... I am curious what lender in their right mind would lend on the second purchase without the sale of the first home.  This scheme is outrageous - glad that you figured it out and declined the listing.

Posted by Ryan Shaughnessy, Broker/Attorney - Your Lafayette Square Real Estate Partner (PREA Signature Realty - almost 11 years ago

This one is a new one for me.  So the agent wanted you to list a house you probably had no chance of selling because they had alread bled out all the equity.  It's OK for you to waste your time, right?  ....and he was including you in something he already knew was wrong.  I can't believe the audacity of some people.  Glad you got to the bottom of this one. 

Posted by Carol Pease, CRS, Broker-Associate 512-721-6320 (JP & Associates Realtors) almost 11 years ago

Candice, thank you so much. It sounded fishy to begin with as he ranted on and on about who he knew...;-)

Roland, you're right - not a good thing.

Lori, it does appear as if there are those who've not heard of this scam. Glad I could help stave off any problems that would occur because of the buy and bail.

Katerina, I knew it was a problem last year, but figured that lenders were onto it by now. I don't know how this would've worked, but underwriting required it be listed - at least that was what I was lead to understand.

Ryan, no wonder lenders/underwriters are so tight-fisted with our bail out money. ;-)

Carol, he was seemingly so naive, that I wasn't sure, but as I drew out more info, and pointedly asked him - well yes, he admitted to "perhaps"....and you're right! Why would I want this listing? ;-)

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

that's very strange that the lender would only want to see the house "listed" in order to approve the loan.  There has to be more to the story that they weren't telling you.  You can't just omit the mortgage payment from the DTI by simply listing the home for sale. Typically lenders want one of three things 1) a lease agreement with a copy of a cancelled check for either first months rent and/or deposit, or 2) a copy of a certified HUD-1 showing they sold the house or 3) a letter of disposition regarding the borrower's intentions with the home, assuming they qualify with both payments (in which case it typically woudn't matter whether or not the home was listed).  of course, a fake lease with a straw tenant would have been the path of least resistance assuming #3 wasn't an option.  no doubt it was a good thing you walked from this.  If there had been fraud involved, your name would have been attached to it, regardless of whether or not you happened to realize you were an innocent party to a scam.  this should serve as a lesson to us all. 

Posted by John Jones (Briggs Freeman Sotheby's International Realty) almost 11 years ago

Buy and Bail.  Has a great ring to it ...sort of like Hit and Run.

Buy and Lie.  Same thing.  Mortgage fraud.  Economy wrecker.


Some Buyer-and-Seller's are liars I guess.   But few go so far as to Git-n-Split.

Posted by Jim Hale, Eugene Oregon's Best Home Search Website (ACTIONAGENTS.NET) almost 11 years ago

The path of least resistance and one that will get you into major problems. Doing this right would be just as easy as doing this wrong.

Posted by Chip Jefferson (Gibbs Realty and Auction Company) almost 11 years ago

Teri, I'm afraid people will find a way to work the system, regardless of past notes and guarantees they have obligated themselves with.

Posted by Steve Loynd, 800-926-5653, White Mountains NH ( Alpine Lakes Real Estate Inc., ) almost 11 years ago

You were very smart to ask all those questions and YES he did know what was happening and he is just as guilty as the home seller/buyer by trying to get you to list the home to help with the mortgage fraud.

Todd Clark -

Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) almost 11 years ago

In my area the lenders want the seller/buyer to qualify for both loans at the same time in order to get a new mortgage on the new property.  This slows the buyer down considerably, as it ensures that the old mortgage will be satisfied.

Posted by Thomas McCombs (Century 21 HomeStar) almost 11 years ago

I had a legitimate buyer who was downsizing and leasing his current home.  His intentions were to lease out his current home for 1-2 years after having lost his job and taken another one at a lesser amount of pay.  He lined up tenants for the home and went about buying his other home, a little $65K fixer upper...he was hoping to move back into his other house and use it as a rental a couple of years in the future. 

All was well...except that 1 week before closing, the program he was on changed and they required 25% equity in the existing home, not 20% as was when he was prequalled.  He had about 21% equity... Killed the deal and now he is stuck, the tenants were stuck and the other deal fell through.  Sometimes there are legitimate reasons for this type of buying behavior but because people do this stuff, on purpose, then it makes it hard on legitimate buyers.

Posted by Ron Tarvin, Broker, Katy, Houston, Cypress 77450,77494,77095 (Residential, Investment properties, rehab projects, property management, luxury homes, new construction!) almost 11 years ago

Mortgage fraud comes in all forms apparently. We are still dealing with the fallout from the last schemes, now along comes another one!  Good for you to ask the right questions and not agree to anything.

Posted by Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES, Florida Waterfront and Country Club Living (Tropic Shores Realty - Ich spreche Deutsch!) almost 11 years ago

Good for you, Teri!!!!  Not only would I not work with this sort of seller, frankly I'd be VERY reluctant to work with that AGENT as well (I'm gathering from your conversation that he most certainly knew, or should have known, what these sellers were up to....and if he's willing to help them s**w the bank...AS WELL AS YOU SINCE HE KNEW THEY DIDN'T EVEN CARE WHETHER IT WAS A HOUSE YOU HAD A PRAYER OF SELLING).  Is that the sort of agent ANY of us would want to have on the other side (ANY other side) of our transactioin!  If you cannot trust the integrity of the other agent, you're sunk!  INTEGRITY MATTERS!

Posted by Judi Bryan, Your Chicagoland Connection (Executive Realty Group) almost 11 years ago

The GSE's ( Fannie Mae / Freddie Mac / Ginnie Mae) have all put in place guidelines in the attempt to avoid this from occurring. One example is that the buyer must have at least 25% equity on the home that is being retained. Other changes are that the buyer can't use the any rental income from the property being retained unless they have been receiving rent on the property for the last 24 months and that must be proven on the tax returns. So yes it does happen but the rules have changed to try to catch this. Remember people the market has changed but not necessarily have the players unfortunately.

Posted by Steven Fishman almost 11 years ago

I guess there will always be people who figure out how to work the system.  Glad you saw thru this, but bet he made another phone call after your conversation to maybe a less trained or knowledgable person. But I don't get it, who in their right mind would want to list a house that the owners don't care if they sell or not? Let us all know when/if the house shows up listed in your MLS as I am sure it will. 

Posted by Dick and Dixie Sells, Realtors, Tampa Bay Florida Homes For Sale (Sells Real Estate, LLC) almost 11 years ago

We can only stop this type of fraud one transaction at a time.. thanks for doing your part.

I am sure that the agent called the next person on the list and modified his presentation a little.

I was in wholesale lending for a number of years - these tactics spread like a virus.

What surprises me is that they did not think to lease the current property to get the payment off their debt load.

Posted by Lee Walsh, Executive Talent Scout for Mortgage Professionals (SecurityNational Mortgage) almost 11 years ago

Teri--Good for you for jumping on this guy and calling it for what it fraud. Nice new picture! :)

Posted by Teri Eckholm, REALTOR Serving Mpls/St Paul North & East Metro (Boardman Realty) almost 11 years ago

Wow - what an ass!  It pains me to see the ethics of "some" other agents.  I am so glad that your hinky meter went off an you followed up AND that you wrote a post to warn the rest of us!

Posted by Leesa Finley, RED Properties - Raleigh NC Real Estate (RED Properties) almost 11 years ago

Shame on these lenders, and the sellers as well!  Thanks so much for sharing the conversation so we're all ahead.

I had just spoken with my lender about some (honest) sellers who are contemplating selling, but would be upside down due to the market, and have awesome credit they value, and whether or not they could rent it out and buy another.  The answer was that definitively they'd have to qualify for both payments, regardless of having the one rented out or not.  It amazes me that others can get these totally dishonest deals through in this day and age!

Posted by Gretchen Conley, Howard County MD Real Estate (Long & Foster Real Estate, Inc.) almost 11 years ago

This is definitely wrong. I bet his client was in the beginning stages of getting behind on his mortgage because he/she still could qualify for the loan on the new home.  That is becoming more rare but definitely alive. Thanks for sharing and making us aware.


Posted by Mike Moulton (Bee Home Solutions Inc.) almost 11 years ago

There's just no end to it. Unfortunately some Realtors are in the process a bit deeper too doing "funny stuff."

I pulled a listing for a customer this week to later find a second listing for the same home with a different agent/broker! When I fianlly figured out who really had the listing with the seller I was told that she knew nothing of the other listing, didn't know the agent, and already filed a complaint.

The property is a short sale under contract and the listing agent suspected the buyer was the client of the other agent and was planning to flip it! Can you believe that?

My earlier query to the "second" listing agent to clarify was not even responded to.


Teri, to the original point of this thread (sorry for the slight hijack) you are spot on and I would do exactly the same. I can only hope that I have the presence of mind to detect it early on and deal with it as you did. Good job!

Posted by Bob Pisa, Broker Associate, Commitment, Service, Satisfaction... (Downing-Frye Realty, Inc. Naples, FL) almost 11 years ago

I had a friend of mine ask me about this for his son and after I explained the ramification of the transaction he was very surprised and explained it to his son. They thought it was completely legal and never thought about the consequences.

Posted by Terry & Bonnie Westbrook, Westbrook Realty - Grand Rapids Forest Hills MI Re (Westbrook Realty Broker-Owner) almost 11 years ago

Terri, I totally agree with you. I had a couple, bought home B and then sold home A on a short sale. I was pretty ticked. They bought home B in just husband's name. That should have been my first clue. It was a remarriage and the wife had bought home A zero down. They were just opportunists in my opinion.

I had another situation where husband had been on loan, wife was on title. She wanted to buy in her name and answer the declarations that she hadn't been foreclosed. I told them, no, that's fraud- you had interest in the property. They complained to my manager, and she told them I had a right to deny the application b/c of fraud. In the end, they just went to another mortgage company who closed the deal. That's the part that really irks me- industry folks simply worrying about the short-term.

Posted by Danell Merren (Providence Home Mortgage/ICCF) almost 11 years ago

If the lenders on the first home bring an action against the "seller" and prove fraud, the seller would be left with a debt that is nondischargeable in bankruptcy, and the realtor may find themselves a party to that action.  Sellers and agents should be aware of the legal implications of such schemes and each should seek legal counsel.  Great post!

Posted by Louis Esbin (Law Offices of Louis J. Esbin) almost 11 years ago


I sounds like the agent was clueless to what he was asking you. If he was aware of the scam the seller was trying, I'm sure he could have told you what you needed to hear.

Hopefully he got a clue and dumped them.

Just out of curiosity, has the home shown up in the MLS?

Posted by Terry Lynch (LAR Notary and Closing Services) almost 11 years ago

It is amazing how many people are doing this. Last week I was contacted by an agent who wanted to transfer his license to our office, during the interview he was boasting about helping people who are upside down but with good credit accomplish the buy and bail. I immediately ended the interview and told him to find someone else to work with.    

Posted by Michael J Martin G.R.I., SFR, MJM Grand Properties (MJM Grand Properties) almost 11 years ago

Unbelievable! Great Blog, thank you for the information.

Posted by Tony Croft, Mortgage Advisor 201-943-6800 (Tony Croft Team at Northstar Funding - Helping 1st Time Buyers, Move Up Buyers & Investors) almost 11 years ago

Wow, call me naive. I trade equities and pretty much know the ends and outs....and "tricks" there, but I'm relatively new to real estate and hadn't heard of that. I wouldn't think it possible.

Guess I better go read your June post.

Posted by Joel Weihe (Realty World Wichita) almost 11 years ago


the lenders figured this one out last year.  they are scrutinizing every deal with a microscope, and kicking back apps for second homes where they suspect the first will be abandoned after the close of the second. 

this includes even legitimate second homes where the first will be rented.  they are demanding positive cash flows (very difficult to prove) and a demonstrated history of landlord success.  i've had two deals stomped upon based on the lenders fear that the buyer was setting the table to walk away from home #1.  the first deal was last november, the second in february. it was probably for the best as the buyers did not have any landlord experience and were proposing rents that were not positive cash flows.

on it's face the deal sounds like the agent who wanted the home listed was a bit of a hack...i cannot imagine any lender accepting a listing contract as a file document.

the fact that it was an agent proposing the scheme is indicative of the ease with which unqualified persons can get a license and engage in the real estate trade.  it takes a year here in california to get a license to cut hair and 2.5 weeks to get an RE license.  we are seeing the next trainload of fraudsters enter now to pick the bones of the desperate sellers.  i would suggest that a letter from your broker to his/hers would be a good public service.


Posted by Michael Ford, California+Hawaii+Oregon almost 11 years ago

I swear we are going to have the best noses in the world to sniff this stuff out in the end.  New agents in 15 years are going to ask why we ask the questions we do and why we are so skeptical!!

Wasn't it crazy when everyone thought they had the original thought of "buy and bail" all at once several years back?

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) almost 11 years ago

I couldn't agree more about the buy and bail.  These people think they are so "shrewd".  I think part of the problem is the fact that it uesd to be one was taxed on the difference between what the bank sold the property and what was owed.  It was deemed income, in the form of a "gift" from the bank.  The policy was placed on ice by Congress, and then extended.
I think it is a terrible policy, as it almost encourages this kind of behavior.  There are no financial consequences to doing this.  Everybody thinks they are the only ones who have discovered this "loophole".  One piece of trash is litter, while a whole bunch of pieces of trash is a garbage dump.

Further, they are probably getting wrong  information from someone.  I wish banks would follow up on stuff like this...  For example, before accepting the short sale, the bank could run a credit report and see if the people have taken out another home loan recently.  Perhaps let the short sale go through, if it is better than foreclosure, but put in some extreme consequences so these people AT LEAST pay taxes, so we all don't have to suffer.

I have never seen greed as rampant as I have in this day and age.  It's ugly.

Posted by Gary Frimann, CRS, GRI, REALTOR and Broker (Eagle Ridge Realty / Signature Homes & Estates) almost 11 years ago

What a great post! Ethics in our country are on a fast decline, we need more people like you to bring attention to this kind of behavior and call it out for what it is, UNETHICAL BEHAVIOR.

Posted by Robert Krames (Smart Media Creative Solutions) almost 11 years ago

I wish that we could create a blog/list/website or ? that we could post addresses on where we are aware this is going on.   I am so glad there are still wonderful, ethical agents that would run as fast and far as they could from this kind of listing.    Unfortunately, I have been on the other side, representing a buyer trying to get into a home that was listed in this manner.    It doesn't stand much of a chance of short selling, so is an enormous waste of everyone's time, not to mention our tax dollars.     I am glad Teri, that you are in my selling area, and think and act like I wish most agents would.    Hope to meet you one of these days.   All the best to you and your business.

Posted by Karen Berg, Experience Matters! (Queen Creek Realtor, San Tan Valley Realtor, United Brokers Group (602)919-2375) almost 11 years ago


Sad that this is happening.  I have a client here in Wisconsin who also has a property in Sun City, AZ. His neighbor "A" was being foreclosed ($450k) on and another neighbor "B" (1 mil) was being foreclosed on. B let his house go and bought simultaneously  How is that possible? Fraud by a few I think.

The Realtor who called you wasn't too smart, if he was a better scammer he could have lured you in better. At least roped you into for a longer period of time before you were able to get all your research together.

I am dumping a seller today because I think they have been less than truthfull about some damage in their home, tyring to hold be to a too short list time and unwilling to work on correct pricing. It is possible that they are just using me to list so they can prove action on their part. Smartening up - Not interested.


Posted by Jo Baldridge (Cindy Gerke & Associates) almost 11 years ago

Oh, but I thought it was the evil mortgage brokers who put us in this mess.

You mean to tell me that the consumer actually gets some of the blame?


Posted by Tom Burris, Texas/Louisiana Mortgage Pro - 13 YRS Experience (NMLS# 335055) almost 11 years ago

I showed a beautiful home in a very nice neighborhood and chatted with the owner while my clients looked through it. The owner admitted the house was a short sale but they were building a brand new home in the poshest neighborhood in town...same builder!

Posted by Jill Watts, A Luxury Experience at Every Price Point! (Realty Pro, Inc.) almost 11 years ago


Just following the "if it sounds too good to be probably is" addage (no referral fee necessary) is probably enough to keep good agents away.

BTW great graphics in the blog!


Posted by Todd Anderson, Park City | Deer Valley Real Estate (You In Park City group - KW Park City Keller Williams Real Estate) almost 11 years ago

I've heard the rumor that they will be prosecuting both the bailers and their realtors (who had knowledge of the plan to bail) somewhere down the line. It might be a bunch of balogna, but for these agents who are assisting, if their moral compass isn't working maybe their fear of doing time will keep them away from these situations.

Hard part is breaking the news to a past client who contacts you about doing something like this. It'll will surprise you the people who don't understand why this is wrong.  

Posted by Jerry & Debby Porter, The Porters PLLC (RE/MAX Alliance Group) almost 11 years ago

Well, I would keep an eye out for the listing to appear and then have a very frank conversation with the listing agent.  I have heard about this happening but fortunately this is not something that happens here in Oklahoma, thank goodness.

You did very well by being 100% straight forward and the caller should be ashamed and embarrassed by his actions.  Karma is a b**ch and he will get his for sure!

Posted by Russell Benson, We'd love to close your deal at Old Republic! (Old Republic Title) almost 11 years ago


I agree.  Seller's are doing as much online research as they can to get out of their current "bad" homes and to get in to new property.  The problem is that they read an article from a scam artist, believe it and throw their morals out the door.  It is a sad and true reality out there.  We must continue to do our due diligence and ask the difficult questions up front.  If something seems fishy, walk away.

Posted by Eric Bables (EXIT REALTY SCV) almost 11 years ago

Several things wrong with that situation.  1st he wants you to work for nothing.  2nd he's engaging in fraud.  That "agent" needs to get out of the business.

Posted by Doug Leugers, Doug Leugers Real Estate Advisors (Leugers Real Estate Experts) almost 11 years ago

It's quite possible the owners simply wanted the house listed to show the new lender that they were buying their new home as a Primary Residence with full intentions of renting their existing home. If a potential borrower cannot prove occupancy, they are forced to the most strictest of qualifications, which are in no way as favorable as Owner Occupancy terms.....Don't think it's always so fair to cry 'Fraud' every time something a bit out of the norm comes across our desks.

Posted by Justin Ross (Stapleton Mortgage LLC) almost 11 years ago

This is also why now, as lenders, we have policies and procedures in place to help detect Buy-N-Bail transaction and NOT let the person buy the new home.

The most common thing we see is "I'm turning my existing home into a rental" and then trying to buy something else (usually a lot cheaper). Before, you could basically get away with just saying you are turning it into a rental. Now, you need to prove a at least a 30% equity position on the existing house, or be able to qualify for the NEW home without claiming potential rental income to help qualify on the new home.

It isn't perfect, but it has cut way down on the ability of people to "buy-n-bail", although we are still seeing plenty of people do it!




Posted by Joseph Metzler, Sr Loan Officer (Cambria Mortgage) almost 11 years ago

Teri - seems like a poor use of time, among other issues. An to Stapleton Mortgage's comment - How is listing a home for sale going to show it is rentable? Seems to me you would need to produce a lease. Simply listing doesn't prove a thing. Or am I missing something?


Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (eXp Realty of California) almost 11 years ago



Good post. I have certainly heard of buyers doing this but I hadn't heard the label "buy and bail". I know a couple years ago we had a buyer consider doing this but they decided it wasn't right and toughed it out. It took them a while to sell their old home and they lost some money when they did, but they also got a great deal on their new home and they didn't have any trouble sleeping at night!

(We are blessed with a lot of good clients!)

Posted by Jon Boyd, Ann Arbor Real Estate Buyers Agent (Home Buyer's Agent of Ann Arbor) almost 11 years ago

@Teri you are indeed correct. It doesn't mean and/or show that is rentable, it goes to help show that the client no longer plans to live there. All of the other stipulations that Mr. Metzler alluded to are 100% accurate as well. 

Buyers are being put through the ringer these days and their list of conditions on new loans keeps getting longer and longer. These clients could very well be able to afford both homes, but the Underwriter in some way senses they still plan to live in this home, all the while buying another one....again, just a possible scenario. Sorry for the confusion.

Posted by Justin Ross (Stapleton Mortgage LLC) almost 11 years ago

Does this fraud include jail time?  If yes, I wonder if the sellers know this.

Posted by Tere Rottink (CoastalVa Realty Inc) almost 11 years ago

...sorry Ms Rottink, I'm still missing the fraud. The agent said "he thought it was the case but wasn't sure." 

Posted by Justin Ross (Stapleton Mortgage LLC) almost 11 years ago

Contacted his Broker in Charge....oh wait a minute...maybe he is the BIC! Amazing.

Courtney Peace Hagins   RE/MAX Island Realty   Hilton Head Island, SC

Posted by Courtney Peace Hagins, ABR CDPE HRC SFR (High Tide Associates Realty / Management) almost 11 years ago

Pardon error, I meant to say "Contact" not Contacted.

Posted by Courtney Peace Hagins, ABR CDPE HRC SFR (High Tide Associates Realty / Management) almost 11 years ago

Hi Terri,

Wow, you smelled a rat fast !  Good for you.  I'm thinking the other agent is probably part of the deal ? 

Posted by Bill Gillhespy, Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos (16 Sunview Blvd) almost 11 years ago

Teri, in this market the sometimes the smartest deals you do are the ones you walk away from. The only way his side will work is if the buyer can qualify for both payments and the "move" to the new property makes sense to the underwriter. I didn't catch where the new purchase was, but if it's local to you, his deal "ain't gonna happen". Even though there is a listing agreement, an underwriter will probably ask for an appraisal of that house and if it's upside-down (as most are) even a rookie will smell out "buy and bail".

Lenders are now required to run MERS on all buyers. It is a search of public records to see if they have ownership in any other properties. The old husband or wife on loan but the other just on title scam is dead.

Lenders may have been dumb but they're not stupid and the restrictions on lending that we see now will be with us for a long time.



Posted by Greg Cook, Mortgage Consultant NMLS ID# 283159 (Platinum Home Mortgage) almost 11 years ago

even if you thought this was ok whats the point if you know upfront this home is not going to sell, how would get paid

Posted by michelangelo vasco (mvp realty inc.) almost 11 years ago


I am a AZ mortgage broker. As I understand the current lending guidelines most banks will allow you to purchase another home as long as you have six months reserves to cover both payments of both homes and a good credit history. Homeowners that pay thier payments ontime and have solid credit history are getting the short end of the stick here. The majority of what is selling are foreclosures and short sales. The banks do not want to work with honest folks that are paying thier payments ontime. They only want to work with folks holding out on their payments. I know folks are intentionally not paying to get the attention of thier servicers because when you call in to say "hey i am 200k upside down!" they dont care! Not that it is right to do but what choices do folks have when the banks wont work with them and in 10 years when the market rebounds they are still upside down? How long will it take for this homeowner to recoup that 200k? Stated income was mortgage fraud (or should have been) and Wall Street/The Goverment allowed all this craziness. Realtors never cared about mortgage fraud when this was happening so what has changed now?

The buy and bail is certainly mortgage fraud I agree, but this will continue to happen and their is hardly anything we can do about it. There however is nothing wrong with investing and renting the old place out.

Posted by JASON COLEMAN (Peoples Mortgage) almost 11 years ago

Thank you Terri for this information.  It is great to be reminded of these types of situations, even if we may have heard of them before.  We must keep each other informed of what really is going on.  That is the only way we can help in reducing these types of "crimes" and that is exactly what it is. 

Posted by Stephen Kendrick, Making Property Management Manageable (Keller Williams Realty Southwest) almost 11 years ago

Great post Terri

Thanks for putting this reality out there. I believe that ultimately it will be the feedback from the field (realtors) that will have any snowballs chance in hell of righting this sinking (real estate market) ship.

I have been hopeful that the current hard downturn in the market would cull the majority of devious and unscupulous real estate agents in the market, but it only takes a few bad apples to spoil the barrel . . . keeping an awareness of such shady dealings as these is simply too important.

As Realtors, ethics and integrity in our daily business practices mean everything. Without them, we may as well be a bunch of used car salespeople.

Keep up the great work Terri!

Paul Weir
United Country - Town & Country Realty
Grass Valley, CA

Posted by Paul Weir (RE/MAX Gold) almost 11 years ago

People are not above doing this. I had one recently where the house was listed as a shrot sale and the seller was trying to get his sister to buy it a highly discounted price so they could keep it in the family.

Posted by Patrick Randles (Nova Home Loans) almost 11 years ago

Stick to your ethics and integrity Girl.  It stops with us.

Posted by Bobbi Blades, ABR,CRS,GRI,PMN,RRS (Re/Max on the Coast) almost 11 years ago

From mortgage scammers to people who create computer viruses to "big crooks" like Bernie Madoff -people are using brain power, creative energy, time and talent to figure out how to harm others, either individually or by hurting the economy in general.

If all that energy went toward something positive, what wonderful innovations would we see?

Posted by Marte Cliff, Your real estate writer (Marte Cliff Copywriting) almost 11 years ago

"We have heard of similar scams where the short sale agent lists the home and then sells it to an investor who is in cahoots with the seller; they turn around and flip the home and then split the profit."

There is a LOT of that going on. VERY hard to catch and very hard to prove. I know a couple who do it and they made almost one million dollars this year. Our states securities dept is looking into it. Another variation is on unlisted properties where a straw buyer is working with the seller/owner and creates a note against the property for a length of time to season it, then they bring in the end buyer and the middle people collect on their note and split back with the original owner. There are more variations. Many of these deals break strict securities laws and are definite fraud to the original lender.

Lets consider the original posting ---is it fraud? Maybe the lender on the home to be purchased actually used those underwriting guidelines. Certainly not a FNMA type lender but who knows, there are institutional hard money lenders, fund managers, etc. It would be a stupid move on their part but if they accept those terms is it fraud? Id need to know more. Can we consider all the STATED INCOME loans fraud? They made the rules. They purchased the loans. For years I tried to get a regular set of rules on stated loans. No consistency between the lenders. No consensus, no actual guideline other than 'It must make sense'. That means a gas station cashier probably doesnt make $10,000 a month. Fraud? Certainly hundreds of thousands of borrowers over the last 20 years have lied or had their agents lie about the income but again, was it fraud? The lenders KNEW what was going on. If we dig deeper it was probably fraud to the end investor but they also knew what was going on. There were NINA or No Income No Asset programs that only wanted the borrower to be alive, and the borrowers didnt have to state (LIE ABOUT) anything. Stupid guidelines but no fraud.

In 30 years of business I did less than a dozen stated loans. Stated loans caused the bulk of mortgage and real estate problems we face now.

Fraud is in EVERY CORNER. These buy and bails, many variations of short selling, loan modding, etc etc

Hear about the cash for keys fraud? Lenders will pay the defaulting owner to quickly leave the home so it can be cleaned and listed. Now idiots are targeting vacant homes, moving in and waiting to be contacted by an asset managers site inspector or bank rep. The people say that the owner rented it to them and it could take months to get them out. The lender offers several thousand to get them out. They take the dough then move to the next vacant home they find. Nice, eh?

Though we cant prove fraud by the real estate agent involved in the topic, Id look into an investigation by the board for possible unethical behavior at the least.

Marvin Von Renchler

Posted by Marvin Von Renchler (Oregon Real Estate Broker) almost 11 years ago

Nice awareness Teri, I have seen this over and over and there are lenders who will lend them the money anyways.  I personally go very deep with my clients, and get them to put on paper their plans with the home they are moving out of, whether it is going to be a rental or what not.  I have them detail a plan on how they are going to rent it, who is marketing it, etc.  Then I let the Underwriter, and investor know with supporting documentation of their plan. 

Posted by Ricky Khamis, NMLS 173141 | CADOC 173141 - 480-339-1565 (Amerifirst Financial, Inc. (NMLS #145368)) almost 11 years ago

I'm very dissapointed to find that there are still people out there in our industry who DON'T get it.  Maybe a nice letter to his State Board of Realtors would be in order. 

Thanks for the heads up.  I'll certainly be aware and ask lots of questions!

Posted by Lisa Oden (Results Realty Services) almost 11 years ago

Teri- I had someone call me last week about a property he thought he might want to buy. He said he wanted to downsize.   In talking with him further I discovered : 1)His house was currently on the market with another realtor, and in the same area he had called about. 2) he said the home was in escrow, and should close in October or so (Huh?  LOng escrow!)  I checked the MLS, his house is listed, is a short sale, and still showing active.

Go figure.  I told him if he wants to buy, he should talk to his current realtor.  I don't know that he could even get a loan.

Posted by Carol Lee, Realtor - Agoura, Oak Park, Westlake CA Homes (Dilbeck Real Estate) almost 11 years ago

It is, in my opinion, "if it looks like a duck, walks like a duck and quacks like a duck ------------"  Karen

Posted by Karen Kruschka, - "My Experience Isn't Expensive - It's PRICELESS" (RE/MAX Executives) almost 11 years ago


Amazing how lengthes are always defined in people trying to cheat. It'd great that you ran from this, and told the guy what he already knew; that it was not right.

Posted by Tom Braatz Waukesha County Real Estate 262-377-1459, Waukesha County Realtor Real Estate agent. SOLD! (Coldwell Banker) almost 11 years ago

Interesting that even on this post, people are at odds about what is right and what is not.  I have not been in this business long enough to know how to even comment on this situation - it seems to me at the very least, fishy. 

People love to find loopholes in the law - and I have no problem with that - is this a loophole?

Posted by Emily Lowe, Nashville TN Realtor (The Lipman Group | Sotheby's International Realty) almost 11 years ago

Amazing to think that this kind of stuff happens everyday. I doubt the agent didn't know what was going on!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) almost 11 years ago

How can someone get a loan on another house when they are severely underwater on their current one and probably still owe a lot on it?  I don't understand that.  The mortgage broker/loan officer would see that they have a house payment on their credit.  Are they lying and telling them that they are getting a short sale or something? 

Posted by Kerry Jenkins (Prime Properties) almost 11 years ago

Teri - This is one of those subjects I really have no sympathy for.  These people who try to buck the system are ruining it for all of us hard-working, pay our bills on time people.  The fact that these people are upside down is not everyone else's problem.  It was a decision they made to buy, and they should have to live with.  At the time, they thought it was a great investment, and wanted to buy as much house as they could.  Many even purchased their homes with stated income in order to get more home for the money, and financed 100%.  Now, all these homeowners just feel like they were wronged, and think it's okay to just walk away.  Perhaps they shouldn't have bought that $500,000 home with 100% financing when they were only making $40,000 a year.

I am hearing of this buy and bail, as well as the scam where the short sale agent lists the home and then sells it to an investor who is in cahoots with the seller, and then they turn around and flip the home and split the profit.  These things have been going on here in AZ for some time now.  It is disappointing to hear how many people are doing these kind of things without any remorse or concern.

Posted by Troy Erickson AZ Realtor (602) 295-6807, Your Chandler, Ahwatukee, and East Valley Realtor (Good Company Real Estate almost 11 years ago

I like the little guy who looks like he has half a brain.  Sounds like the agent who contacted you Teri!

Posted by Linda Landry (HomeSmart Realty) almost 11 years ago

Good information and good for you for taking a stand and having morals, so many agents don't care, just want listings and business that they don't ask the right questions.  We have to have integrity and its too bad that some other agent probably took the listing and aided them in this mortgage fraud scheme.  These people make it harder for everyone else who is trying to do right by their clients and whose clients are honest and good intentioned.



Kim Darling

Posted by Kim Darling, CRS,GRI, "Your Home Team" Fresno/Clovis Homes (Keller Williams Westland Realty BRE# 01864461) almost 11 years ago

Teir - I haven't had this happen to me, but I'm sure it happens all the time and people involved in fraud see nothing wrong with it.

Posted by Michelle Gibson, REALTOR (Hansen Real Estate Group Inc. ) almost 11 years ago

Teir - I haven't had this happen to me, but I'm sure it happens all the time and people involved in fraud see nothing wrong with it.

Posted by Michelle Gibson, REALTOR (Hansen Real Estate Group Inc. ) almost 11 years ago

Good info. Thanks.

Posted by John DL Arendsen, Crest Backyard Homes "ADU" dealer & Contractor (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) almost 11 years ago

Teri - no surprise about people like that...they are all around us and not only in RE...however, knowing already what is going on, the real estate agent should refuse to even touch such transaction...this is like seller's 'fraudulent disclosure' and agent 'blessing' the fraud  for financial gain... and on the top of everything there is probably the 'super lawyer' who is going to 'serve' the seller and earn more to cover his golf lessons..shameful...

With smiles,

Bo in Yukon

Posted by Bo Kociuba, Realtor - Mustang, Yukon & OKC Metro 405-812-1572 (McGraw Realtors ) almost 11 years ago

As a Home Inspector, I was involved in one of these deals.  The owner of the house I was inspecting had been given the waterfront property by family, took out a large second to build a new house, then dumped the waterfront property back to the bank.

Sounds like stealing to me.  Of course the waterfront property was a wreck and he ended up with a new house.

Posted by Howard Maxfield (Plus One Inspection Services, Inc.) almost 11 years ago

And we wonder why the public list Realtors, Lawyers and Used Car Salesman at the bottom of the list.  Is it time we start policing our ranks on unscrupolous agents and report them? It was obvious from your story that agent knew exactly what was going on and all he was interested in was his commission check aparently.

Posted by Tony Hager, Broker (United Realty Texas) almost 11 years ago

I think it's being an aggressive broker on behalf of one's buyer. 

The relationship is tied to THIS transactoin, not their prior one.  As long as they disclose their financial obligations to the new lender - who is not harmed - then there is no fraud.  In fact, their interest are promoted from stopping paying on the prior property.

If they are losing their prior home, I think the prior lender knows they can't pay already. So, THAT's disclosed.  Also, how do you know they aren't doing it subject-to or owner financed or cash? I suspect it is -- which is a legal transaction.

The issues are civil in nature.

We have nothing in our Ethics binding us to the prior lender. We are bound to discharge the legal directions of our clients.  This is legal, maybe a civil issue and subject them to liability down the road (though the foreclosure usually wipes that out if the bank pays the full amount they are owned on the first - as it was explained to me by an attorney here in Colorado.)  However, we are not attorneys and, thus, cannot give legal advice, like: It's legal, it's wrong, it's illegal, it's fraud...

We can choose to self-eliminate from the deal.  I wouldn't do the deal, but I would try and buy the foreclosure on a killer deal.


Posted by Michael Clarkson (Snow Coast Real Estate) almost 11 years ago

I just respectfully refused a buyer who wanted me to help them find a home so they could walk away from their current one.  Why? Wifey wanted a bigger house. A real tribute to our instant gratification society.

Posted by Amy Jones Group, 4 Time BEST OF OUR VALLEY Winner (South East Valley - almost 11 years ago

If you though you could get the short sale done, why not sell it. 

I do not have any idea why I would have a problem selling the property on behalf of the seller.

I do not see how getting a new loan is mortgage fraud on the old one.  If the banks are giving him a loan, he must have the income to qualify. 

If his old lenders do not wish to do a loan workout with him, then they have their remedies such as foreclosure.

This is business, theirs.  The lenders  know how to play the game.

They will just lobby Congress and Pres. Obama and "his" (read their goldman guys) for more money and therefore more inflation.








Posted by John McConnin (McConnin & Company Realty) almost 11 years ago

I know you would not have done it, but you should have tried to charge a fee just to list it, whether is sold or not.  It takes a lot of nerve to ask you to do that.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) almost 11 years ago

A scam, and fraud.

I had a call a few weeks ago. Similiar.

I picked up on it too.

Told them no thanks

They listed with another local realtor who didn't get it.

Shame, shame.

Why isn't NAR and local boards teaching on all this goings on ?

Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) almost 11 years ago

Dear Teri, thank you for bringing up this situation to light, it does happen and it has been in the news several times here in California, specially on subdivisions where all the houses are the same, most people did it at the beginning when the house across the street went into foreclosure and the prices dropped so much that is sort of made sense to simply go to the other side of the street to an exact house but with a price and a loan that is about 40% lower than the one they lived in. There are so many other scams going on, we must be prepared to identify them and stay away from them.


Posted by Antonio & Alexia Cardenas, "The Realtors In Motion" (Alameda County - San Leandro, CA.) almost 11 years ago

Teri, I remember your buy and bail story from earlier, and it is amazing any Realtor would participate in such a scheme. What happened to the Code of Ethics?

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) almost 11 years ago

Thank you to everyone commenting on this post! Interesting how some seem to be "okay" with this behavior. I'm simply not!! If anything "smells" rotten, it probably is.

For those of you who asked if I had watched to see who listed the home - no! I didn't even get as far as asking for/writing down the address.

I think more Real Estate Professionals need to be aware of the signs of this type of fraud and WALK!!! I think that sharing what has been shared may be enlightening to all of us. This is one of the reasons I find Active Rain such an excellent source for sharing such stories and experiences.

I neglected to mention that I had to "price" the home higher than it would comp for....which, of course, I would not have done.

On another note, I received many emails from Rainers sharing their comments, as well as a phone call from a gentleman in California thanking me for sharing this story. Everyone shares in this venue, and I'm proud to share my stories as well.


Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

I had the EXACT thing happen to me last week!  An agent said her client wanted to "list" his home.  After talking to him, I busted him in a lie - he told me it was a divorce situation and that the wife had obtained a second without his knowledge, I pulled county records and found HIS notarized signature.  He told me he just wanted to "list" it and didn't even want it to be shown.  The other agent said the same thing "just put on the MLS do not show until August 31st".  I sent her an email and explained that I'm not interested in a "listing" and that I do not like to deal with people who lie.  Funny, she never responded!  I agree with you 100% I ditched that listing immediately!!  I really dont even know what they were up to, but I was not about to become involved!

Posted by Paula Smith, Paula Smith Associate Broker RealtyPath St George (RealtyPath St. George) almost 11 years ago

Paula, good for you!!! You sound like you're a very diligent Realtor!!! ;-)

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago


I am confident that their deal on the new house will not go through unless they can qualify for the payment on both.  It has been hard enough to get a refi with ony 1 house to worry about.  Thank God, the banks wised up to that scheme last year. 

It infuriates me to even think about it!

Thanks for your blog,

DeeDee Riley

Posted by DeeDee Riley, Realtor - El Dorado Hills & the Surrounding Areas (Lyon Real Estate - El Dorado Hills CA) almost 11 years ago

Hi Teri..That's some story, Good for you for digging, I Never run into that here, but hey there is always a first time. I cannot imagine another Realtor using you like that :O(

Remember work on Sold Signs :O))

Posted by Fred Carver Personal Real Estate Corporation, Accredited Real Estate Consultant (RE/MAX Camosun Victoria BC Real Estate) almost 11 years ago

100 That-a-girls!  There are enough clowns in this country that will not accept responsibility for their own actions.  We don't need Realtors, like the one you encountered, helping them along.  The Realtor and his client should both get new homes (behind bars).

Posted by Steve Moore (Steve Moore/David Massey Real Estate) almost 11 years ago


Buy & bail is new to me,too!   I'm going to read your previous post! Thank goodness for AR and ALL the information shared here!

Kathy Opatka


Posted by Kathy Opatka, Serving Ocean City, MD, & The Delaware Beaches (RE/MAX CROSSROADS) almost 11 years ago

I thought they put a stop to this and agree with #33.  Code of Ethics is a joke obviously to some as Gary mentioned.  Congrats for you smelling that 'fishy' story.

Posted by Lyn Sims, Schaumburg Real Estate (RE/MAX Suburban) almost 11 years ago

Based simply on a typical agent's limited time to deal with such nonsense, it takes quite a nerve to "ask" for assistance when there's no benefit in it for you!  It doesn't look correct, and I am sure you sniffed out the truth and raised some of our eyebrows as well. Thanks!

Posted by Brad Calef (Coco Plum Realtors) almost 11 years ago

You did exactly the right thing.  I am sure he found some agent to list it.  Probably didn't give the agent any info and tried to find a new agent without as much experience to sniff these things out. Good for you.

Posted by Gloria Losie (Solid Source Realty Ga) almost 11 years ago

Again, thank you to all of you for taking the time to share and to comment. Very interesting discussion. ;-)

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

Teri -  There are always people who will try to beat the system.  You are so right; as Realtors this is something we need to keep in mind. 

Posted by Jennifer Fivelsdal, Mid Hudson Valley real estate connection ( JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571) almost 11 years ago

Some upside-down sellers won't qualify to buy another home, either.

Hey, I've got to say, Teri, I love your new hair and photo!!!! I just chopped off my hair and let it go curly, but I love your "do."

sacramento short sale agent

Posted by Elizabeth Weintraub Sacramento Realtor Top 1%, Put 40 years of experience to work for you (RE/MAX Gold) almost 11 years ago

Let's not forget the banks that caused this mess. Look, many consumers bought over their head - no denying that. But many people in this situation - their house is worth $100k or $200k less than what they owe - bought well within their means - and can still afford their house with no problem. They are simply victims of circumstance, and they are stuck...they can't sell (assuming they need to move), and watch their investment dissappear. Again, I do blame the consumers to a certain extent - the ones that bought over their head and relied on variable rate morgages so they could afford that larger house. However, we are talking about a meltdown on such a scale that it caused a complete collapse that impacted not only the home finance / mortgage sector, but ultimately led our economy into a very deep and ongoing recession. This major of an event falls squarely on the shoulders of the banks and our government for a complete breakdown of regulation and outright common sense lending practices. We have to have controls in place to protect our economy and financial security - and in general we do - they were just circumvented and ignored.

And of course, the system continues to reward irresponsibility. If you are $200k in the hole, and can afford you payment, you are stuck - there is no help. However, if you were one of the irresponsible consumers, you may qualify for interest rate reductions, principal reductions, or other assitance. And of course, while consumers are losing their jobs and struggling to make ends meet, the bank executives that caused this mess are collectiing millions of dollars in bonuses  -  courtesy of our tax dollars and bailouts - well deserved, eh? Even companies like AIG and Citi were paying out bonuses - some of the largest beneficiaries of our tax dollars! So, sorry - I am not going to cry a river for the banks!

Now, I do not advocate this doesn't help the situation. But if we are going to call this fraud, let me know when the bank executives are going to jail as well - or at the very least lose their jobs! There is certainly a double standard in this country.... we need accountability, and that accountability needs to include everyone.

Posted by Brad Martin almost 11 years ago

Brad - I basically agree with all you have so eloquently posted. Thanks for your comment. ;-)

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

Very good discussion!  We need to be very aware of every new scam that comes down the pike. ~JC



Posted by Janice Cooper, Broker Associate, ABR, ASP (Long & Foster Real Estate Inc. ~ C: 609-694-3622 New Jersey) almost 11 years ago

Elizabeth, thanks!!! I like to change things around now and again. ;-)

Janice, I thought so too.....lots of great ideas.

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

I couldn't agree more with you Teri. It is not worth one commission and my LICENCE to do such unethical behavior.

Posted by Mark Velasco, Top Producing COMMERCIAL Team 30+ years experience (Sharpstone Commercial) almost 11 years ago

Mark, you're right. Any doubt - forget about it. ;-) Thanks for dropping by. ;-)

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) almost 11 years ago

I am late to the party on this one but at least you did the right thing.  I still see a lot of that happening and it is tough to differentiate with what people are really planning to do at times.  But my rule of thumb is that if it seems fishy, it usually is, so get out of there.  Thanks for the reminder.

Posted by Eric Murrietta (Homeowners Financial Group USA, LLC) almost 11 years ago

You are so right Teri. There are so many people in our culture who don't worry about the consequences of their actions and that is a big part of what created the financial mess we are in now!

Posted by Sybil Campbell, REALTOR® ABR, SFR, SRES Williamsburg, Virginia (Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia) over 10 years ago

Buy and bail - a pretty slimy approach to business or life. BTW, I love your use of color and different fonts!

Posted by Gary L. Waters Broker Associate, Bucci Realty, Fifteen Years Experience in Brevard County (Bucci Realty, Inc.) over 10 years ago

Gary, a very slimy approach....that appears to be more the norm these days. Thanks!!!



Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) over 10 years ago

Thank you.  I am a broker and get very frustrated when I am brought the financing side of these deals and the borrowers act like it is no big deal.  We all need to be strong enough to shut them down and walk away.  I applaude you and please continue to stand up to these individuals. 

Posted by Kyle Jan, Phoenix AZ Homes for Sale over 10 years ago

Kyle, it IS a big deal....and very dishonest. Thank you for coming by! ;-)

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) over 10 years ago

I have a number of people present me with similar situations that appear to be basically the same deal.  They come in several different cloaked forms so its not quite as easy to detect that amount to the same thing.  I agree, it is not worth the potential money, to be dishonest.  Apparently there are some out there who are either un eduacted & don't know, or don't care, I'm not sure which.

I have had at least a couple people who wanted to buy a new smaller nore affordable house & attempt to rent their way upside down house.  Since the potential rent would be not near enough to cover their mortgage, what do you think the next step would be?  This might not be as clear, but could still get an agent in potential trouble down the road in case that rented house defaulted.  I suggested looking into a short sale for these people, but they declined. 


Posted by Craig Chapman, The Value Guy (Call Realty / Access Appraisals) about 10 years ago

I think banks are on to this pheniomenon. They started cracking down about 2+ years ago, but you can typically buy a 2nd home if you have the down payment and at least 6 months of PITI in reserves for both places. This is still not going to stop someone who owns a home that they owe $450k and it is worth only 300K when they can find a home that was worth 900K and now buy it for 500K. They are getting way more house for the same current moeny and they have the cash reserves to do it. I have seen it done recently and the lenders are allowing it because the buyer's profile looks pretty good. It is still a sham though, Jason


Posted by Jason Whaley (WestUSA Realty Revelation) about 10 years ago

I had 3 situations this year that were buy and bail. It is surprising how enrolled the people are that this is the solution. One RE agent told me he called his attorney and the attorney said no one would ever come after him for this. I told him he was a future client for the Attorney, nothing more. It got me black balled from his RE office....Oh Well

Posted by Kevin Lambe (Amerifirst Financial) over 9 years ago

Teri, Thank you for the way that this was handled. On the lending end we also have our antenna up. There are comprehensive criteria to meet when buying a new home with an existing home in place now. You would think that this would create another level of protection against these types of transactions, but buyers are apparently able to find lenders that essentially look the other way. This is part of the open door. I don't wish to be a policeman, and I certainly want to create new business, but if this profession has learned anything, it's that the integrity of the entire system starts and ends at the front lines. Thanks again.

Posted by Howard Shapiro (Homeowners Financial Group) over 9 years ago

Teri, Thank you for the way that this was handled. On the lending end we also have our antenna up. There are comprehensive criteria to meet when buying a new home with an existing home in place now. You would think that this would create another level of protection against these types of transactions, but buyers are apparently able to find lenders that essentially look the other way. This is part of the open door. I don't wish to be a policeman, and I certainly want to create new business, but if this profession has learned anything, it's that the integrity of the entire system starts and ends at the front lines. Thanks again.

Posted by Howard Shapiro (Homeowners Financial Group) over 9 years ago

Hi Teri,  I  just finished the first of a series of four blogs where I will detail the guidelines to enable an underwater homeowner to legally convert their current residence into a second home or an investment property.  Being here in Arizona I get those calls every day or so.  You might find it helpful to know the lenders rules to make it happen.  Here is the link:  Check back with me next week for part dos.  I hope you find this helpful. 

Posted by David A. Weaver, 24 years helping folks finance their dreams. (Peoples Bank & Trust Co.) almost 9 years ago

I look foward to reading your series on guidlines Teri. 


Posted by Kimberley Rosenstein, Superior Service (HomeSmart) over 8 years ago

Posted by Mark Taylor Mortgages, 602-361-0707 #MarkTaylor #Awesomerates NMLS#207897 (and for 1st Time Buyers, Move Up Buyers & Investors ) over 8 years ago



Thank you so much for sharing this. I have been appalled at this practice ever since I first heard people were doing this. Really, just dump your responsibility for one home and walk away from your obligation and walk right into another home! I really hope Realtors will not assist people in these transactions.


Ann DeWolf

ADT Security

Posted by Ann DeWolf (ADT Security ) over 7 years ago

Ann, right on! Hard to believe isn't it? Hopefully the lenders are more savvy about this stuff than they were at the time I posted this. ;-)


Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) over 7 years ago

Unbelievable that this is still happening.  That agent knew, or should have known, and was only looking to get paid.  Amazing!

Posted by Jan Green, HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN (Value Added Service, 602-620-2699) about 5 years ago

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