Suppose you still have good credit, and are upside down on your mortgage, and paying 6-7% interest rate. You can't refinance, because you have no equity. You would like to buy the house next door for 1/2 of what you owe on yours and at the current 3-4% interest rate. In order to buy the new house, the banks will make you produce a rental agreement on the house you live in. (when you really plan to do a strategic foreclosure) Why not let you give the existing house back to the bank (its called a deed-in-lieu of foreclosure, but it ruins your credit) in the same escrow transaction as purchase of the new house?
Why is this important?
I think I have a partial and easy solution to the housing crisis.
Until we fix the housing crisis in CA, Nevada, AZ and Florida,
the economy will not recover.
