Reporter Nick Timiraos explains:
In markets hit hardest by falling home prices and rising foreclosures, lenders and brokers are discovering a new phenomenon: the ‘buy and bail,’ in which borrowers with good credit buy a new home—often at a much lower price—then bail out of the ‘upside down’ mortgage on their first home.
The problem is the piece largely traffics in rumor, never offering proof that this practice is a “phenomenon” at all.
We get no figures on how many homeowners have opted to “buy and bail,” and little anecdotal evidence. The Journal talks to a grand total of two people who have done it, and those are the only confirmed cases we hear about.
The reporter does talk to two real estate agents, but they don’t add any definite cases to the dirty duo we already know. One of the brokers is working with clients (we don’t know how many) who are “considering walking away from their mortgages.” The other “says he receives one to two dozen inquiries every week from individuals inquiring about a buy-and-bail.”
Okay, so the practice may be a story—with a lot more reporting to find out if it is true.
Reporting beyond, say, a vice president at Fannie Mae who has heard reports of the practice but “doesn’t have data to quantify the size and scope of the trend.”
The Journal drops perhaps the most key bit of information too far down in the piece.
While buy-and-bail is on the rise, the practice doesn’t appear to be widespread.
The idea of a “new phenomenon” being “on the rise” is a bit confusing to us. On the rise from what? From not existing at all? And how do you know if something is on the rise if you don’t know how many people are doing it?
Either the Journal should have offered us some hard facts, or it should have bailed on this one.Elinore Longobardi is a Fellow and staff writer of The Audit, the business-press section of Columbia Journalism Review.