Partial Solution For The "Subprime" Crisis

Buy the fire sale house across the street, reduce your own mortgage. The free market succeeds again in solving a problem.

I got an agreement of sale today from a realtor looking for a prequal on a shortsale , the buyer lives next door, he has a current mortgage for $800,000 on a home he purchase in 2005 with no money down, the home he has under contact is right across the street from his present home, the offer is for $500,000 and it looks like the bank will accept it.

The borrower plans to buy it as a primary , once he moves in, they will stop making payments on the $800,000 loan that they have with CW.

He qualifies full doc and has a 770 FICO , he figues letting his credit tank is not a big deal when he is lowering his mortgage debt by $300,000.

I told him the new bank may deny the deal based on occupancy, tried to convince him to go NOO but he does not want the higher rate.

What do you think ? anyone had this scenario yet, I sure it will be happening more and more especially in CA and FL.

Link.