Question: can you get another loan buy a house and then short sale your upside down house. is it legal?
Answer:
This actually happens more often then you would think. Homeowners that are upside down and have negative equity, feel it would be better to just let their home go. Most refer to it as strategic defaulting. There have been ideas floating around to try and combat this action because it happens quite often. But before their credit is bad, they go find another home, sometimes smaller, more affordable, usually at or under market value and lock in the rates, then default on the other property. Their credit goes bad and in some cases may have to file bankruptcy, but it’s like they are starting fresh again and they still own a home that won’t take decades before they have equity again.