If you don't know what "Buy and Bail" is read this post. For the rest of you who know what buy and bail is, how has buy and bail changed the lending industry for every American?
Look at it this way: A bank gets robbed by a 20-yr old white male wearing a Cubs baseball hat. Then it happens again with the same type of guy and same hat. You start to see a pattern when hundreds of banks are robbed by a person with the same MO. Could this be an organized gang or perhaps tons of copycat bank robbers?
One day a customer enters a bank fitting that description and the teller behind the counter gets very nervous and the adrenalin starts to pump. "<em>OH NO! I'm going to get robbed</em>!" Perhaps the guy has a Red Sox hat. The teller still gets nervous because he looks close enough to the other robbers.
The banks say "Let's not wait till we get robbed again. Let's increase our security (like at the airport) and search all guys fitting this description. WAIT -- let's search <em>everybody </em>because maybe later we'll get robbed by a Chinese woman wearing glasses and a wig.
Buy and Bail people are like bank robbers. They "rob" Fannie Mae of money owed on house "number 1" while going out and getting house "number 2" -- knowing full well they are going to buy and bail.
Unfortunately it isn't as easy as "what you are wearing" to determine who will be the next buy and bail person. To see who might be a potential buy and bail robber simply look at what the other buy and bail robbers had in common when they did their buy and bail:
- Buy and Bail clue 1 - they had homes that were upside down
- Buy and Bail clue 2 - most bought a new home in the same general area where they lived
- Buy and Bail clue 3 - they all said they were going to rent their current home
- Buy and Bail clue 4 - they all had no history of rental income from their current home
- Buy and Bail clue 5 - most had no renter lined up or a fake rental agreement
- Buy and Bail clue 6 - they could not afford two home mortgages.
When your current home is upside down and you are trying to buy a new one, please understand that you look like the last 1,000 buy and bail bank robbers. The government put out a warning that if you look like (or your file even smells like) the other buy and bail bank robbers they will assume you might be a buy and bail robber and REFUSE your loan. If you get the loan you will need to jump through extra hoops such as: take a lie detector test, get fingerprinted, and possibly get a GPS tracking chip in your forehead.
Underwriters are now like bloodhounds sniffing out anything that might lead them to the scent of another buy and bail robber!
It's sad for the ordinary 20 yr old white guy in a Cubs hat who is coming into the bank for some honest business. He's in for a rude awakening. PUT YOUR HANDS IN THE AIR AND STEP AWAY FROM THE COUNTER you buy and bail robber!
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Source: Arizona Mortgage
Mortgage Lending, Rates, Brokers, Process