Strategic foreclosure... is it your plan?

Strategic foreclosure is just one of the option many people heavily consider. This is when a homeowner, who has not yet missed any payments and their credit is still "A" credit, purchases a new home and let's their old home go into foreclosure.

There have been many reasons why people are doing this... the are disgusted by today's falling prices, they have no equity and can't refinance, the bank won't help them modify their loan because they aren't in trouble yet, they see trouble coming and want to get out before it hits, they have tried to sell and just don't have any interest and other personal reasons.

There certainly are some ethical questions about doing this-- but I understand it can be hard to think ethically when your family is facing being out on the street-- and many people feel their bank isn't acting ethically. I am not saying I think this is right... but I do understand how and why it happens.

However, this is becoming a more difficult way out. The lenders have been catching on and Fannie Mae has just changed their lending guidelines. My take on the new rules are that when you are purchasing another home as a current homeowner, you must have 30% equity in the already owned home. If not, you need to show that you have six months of reserve funds for BOTH properties!

Read my other post on strategic foreclosure:
http://helpwithforeclosure.blogspot.com/2009/08/why-strategic-foreclosure-is-dead.html