Quote:
Originally Posted by Hack&Lube
I still don't get the straw buyers bailing on the houses, how can you be talked into taking a mortage in your name that you can't afford? Do they bail when they realize they've been had?
I had assumed from that article that everybody scratched each other's backs and that's how this is maintained. You can't have poor immigrants defaulting on mortages left and right without someone going to the police, etc. and this thing exposed way earlier than 2006.
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I think the way it works is that the straw buyer doesn't actually live in the house. Their name is on the mortgage, "person B" makes the payments. The straw buyer is promised that the house will be rented out if person B can't make the payments, but what happens is everyone bails once the money is secured and the straw buyer is stuck with a mortgage in their name for more than the house was worth.
Person B can actually be the person selling the house, or colluding with someone else. So they sell the straw buyer a house for a lot more than it's worth, pocket the difference, and bail out on the property. The straw buyer may not even realize until they get served with papers.