Just wondering what the implication for a homeowner is.... here is a hpothetical: homeowner buys house for 500k in 2002 get a new mortage now at appraised value of 1 million, pockets the $500k extra cash from the new $1 million mortgage invests the 500k cash say the housing market absolutely crashes back to where the house is worth 500k, 2002 levels can the homeowner give the keys back to the bank, tell the bank tough luck, the homeowner just forecloses on the home and get a major credit ding. then when the home goes up for auction, homeowner uses the 500k cash and buys the same house outright and then owns the same house free and clear with no mortgage? where is the flaw im my logic (and lets just assume prices do crash, please dont turn this into a real estate up or down type argument)
Deficiency judgement would hold you liable for the rest. So you would have to fork it over or file BK. What you are thinking of is basically fraud. Your best defense is that you spent the 500k on drugs and hookers when they ask what happened to it in BK hearings.
You could pay cash to buy a house in FL using the homestead exemption clause. You might have to do it before the foreclosure to avoid possible fraud. The homestead exemption clause is factored into the FL constitution. The Enron accountant, Fastow, has a $50 million spread in South Florida somewhere and no one can touch it. Transferring the money to a corporation or spouse might be an option. I would check with a good lawyer and accountant. Buy a gun and don't list your phone number also.