Some new “Buy and Bail” info

I have talked to many people recently about one area of major concern in the lending industry. The term is “Buy and Bail” and it can have an effect on all of us. On Wednesday of last week, I received an email from a friend at Wells Fargo that talked about some of the coming changes dealing with people that want to buy another home while keeping their current home. The problem, in case you are not aware, is where people that purchased a home at the top of the market and are now “upside down,” go out and buy another home, at a lower price and then “give the keys” back to the lender for the original home, allowing it to be foreclosed instead of the owner fulfilling their obligation.
Part of the new guidelines are as follows.

The new Fannie Mae BUY & BAIL policy states that a buyer planning to retain and rent out their current residence must: 1) prove 30% equity in the property, 2) provide a copy of the new lease agreement, and 3) provide a copy of the renter’s security account. If these criteria are not met, rental income may not be used to qualify and a reserve requirement is also added. Buyers who plan on keeping their current residence as a second home must qualify on both payments and show 6 months reserves for both house payments.

If this is “clear as mud” to you, please feel free to “Just Call Nick” for a better explanation. As always, I will be happy to discuss current market conditions and some of the “hot buttons” in the industry right now.

About Nick Bastian

Nick Bastian is a 26 year veteran of the real estate industry and enjoys his career very much. Nick is always available to "talk shop" with anyone that may have real estate related questions. "Just Call Nick" at 602-803-NICK (6425) - he's glad to help.
Nick can also be found over on the Phoenix Real Estate Guy blog and on Twitter or out and about in the community making friends and having some fun.


  1. As the people play games with the lender, they will adabt as well. This is happening on my end as well.

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