Asked by Hannah Fliegel, Larkspur, CA • Sun Apr 11, 2010
Borrower purchased a home with an exotic mortgage product back in 2006. Due to negative equity the borrower could not refinance. The lender would not offer a loan modification. The lender would not authorize a short sale without the borrower signing a $80k promissory note. Therefore, the borrower executed a strategic foreclosure. This was a purchase loan in a non-judicial foreclosure state. This soon to be homeowner again after 18 months found a new home to purchase with seller financing. The buyer paid the seller 20% down, both realtors were paid their full commission. Typically FHA would not extend a mortgage for 36 months after a foreclosure. Is it a big deal that this "strategic foreclosure" borrower is so quickly back to home ownership or should he pay for his "strategic foreclosure" and not have the privilege yet?
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