Shop, Swap, Drop

[jillayne]

I just heard a new term today in class from my real estate agent students: Shop, Swap, Drop.

Agent says it's becoming more common for a homebuyer to be shopping for a move-up home; a nicer home in a nicer neighborhood.

The buyer has an existing home far underwater with some variation of an undesirable mortgage: Option ARM, interest only, etc. They don't qualify for any kind of loan mod because they are making enough money to keep making the payments on the existing mortgage.

Buyer selects a nicer home, qualifies with both payments, closes on the new, better home and then defaults on the underwater home.

No need to even try for a short sale because they won't qualify: They have assets. So they default and let first house go back to the bank, trash their credit score for awhile but now have a nicer home.

I can't imagine this will become too terribly common. Most people can't qualify for two mortgage payments. But I could be wrong.

I'm going to post this on RCG to see if we can get any agents confirming a possible trend.

[dls]

The demonstrated attitude seems inline with the general decline of morality and civility I've experienced. My mom (late 70s) knows a women of similar age who is living above her means by maxing out her CCs, the female isn't planning on paying off the cards, just living on them until she dies and then 'stiffing' the CC company(ies).

Guess I watched too many John Wayne movies growing up, such behavior doesn't seem 'right' to me, just like the 'shop, swap, drop' attitude behavior seems immoral to me.

[Markor]

Whether or not it represents a "general decline of morality", if people don't start treating their personal finances like businesses do, likely they can forget about retirement. My guesstimate of the number of extra years the average worker must work to make up for "losses" due to businesses (treating their finances like businesses do) is 5+.

For example, say Morgan Stanley walks away from five office buildings, causing a teacher's union to lose 20% of their pension money, then property taxes go up to make up the loss. And such things happen over and over until the "moral" people are left working until they die, at Wal-Mart too since their higher-paying jobs were outsourced.

I support people taking every possible advantage against big business, if only in a vain attempt to even the score. People who Shop, Swap, Drop paid a premium for their mortgage in terms of higher closing costs, in non-recourse states. They paid extra for the contractual right to walk away from their former houses.