“Buy and Bail” is the term used for homeowners who, while owning one house with an underwater mortgage, obtain a mortgage for a new house. Then, after they have purchased the new house, they “bail” on the underwater house by letting it go into foreclosure.
This article discusses how homeowners have accomplished this. Depending on how the “buy and bail” process occurs, the homeowner may be committing fraud. According to the article, the FBI is currently pursuing more than 3,000 mortgage fraud cases. The practice of “buy and bail” is not without risk.