Strategic Default Illegal?

[she2003]

What is the name of your state (only U.S. law)? CA

If I obtain financing for a new home, then default on the loan for my existing home, is that an illegal strategic default?

I am not clear on recourse versus non-recourse. I did refinance my existing home loan about 3 years ago and closing costs were built into the loan amount.

If I just hand over the keys to my current mortgage company, who is responsible for taxes and insurance on the home?

Thanks

 

[justalayman]

If I just hand over the keys to my current mortgage company, who is responsible for taxes and insurance on the home?

you, unless the bank accepts you deeding it to them.

 

[FlyingRon]

It is almost certain that your refinance was to a loan that is subject to recourse.
As pointed out, banks are unlikely to just accept the deed these days. They don't want the HOA and tax liability on a property they may not be able to sell. Further if it is a recourse loan, they won't assume ownership unless they either foreclose or you sign that you continue to be obligated for the money you owe.

What makes you think someone will give you a mortgage on a new property when you are upside down on an existing one?

 

[nextwife]

Why wouldn't you complete your current responsibility before moving on to another?

 

[fmccarthy]

While doing one then the other is not in itself illegal, did you have to "fudge" a few things to get that loan? Or, will you have to make "small misrepresentations" to try to get away with the default/short sale or however you will wind up handling it? If so, those little items constitute mortgage fraud which is a federal crime.

 

[HUD-1]

Lenders have gotten savvy to this. They may want to see 75% LTV on the house you are vacating and may not use the rental income from it to qualify you for the new loan. I agree with the previous posters, making false statements to induce a credit decision is "illegal" - check out all those statement on the 1004 application form you are signing.