You can see from the different answers not everyone agrees on this issue. Basically it boils down to one simple step : has it been disclosed to the bank ? if not it is fraud.Also does it feel right to you ? Investors are not lic. and maynot be aware of all the rules and laws they just see other investors doing it and follow in thier path. I know several investors who have wanted me to work with them on doing this same thing and I have passed. New lending requirements also state you have a 3 year window after a foreclosure ( 6 mos . behind on pymts ) . I have a lease to own program but you need to be 18 months from the foreclosure date to be enrolled.