Hi All -

So, some people I know have done this:

They live in Detroit and have mortgages which are way way higher then the value of thier homes. Let's say their mortgage is at $90,000. They found the means to get a loan and then buy the house down the street for $5000 or $10000, walking away from their mortgage.

A recent writer on CNN.COM wrote "in my books this constitutes fraud"

I'm no lawyer but I suppose the mortgage company could take the debtor to court, find their assets, and try to take them or at least put a lein on them.

My friends' theory is this: "My credit will be ruined for 7 - 10 years. Why struggle for that long trying to make payments on my overinflated house. I wouldn't have made enough money in the 7 - 10 years to bring the balance down to a reasonable level anyway, so financially this makes sense."

I look on realcomp.com to see the houses on the market in Detroit. So many were mortgaged out to $50k or $60k, foreclosed, then put on the market for $5k. It's sad, but the housing market is just devestated.

What do you think? Are my friends commiting fraud? Or just doing what is in their best economic interests?