Riddle me this: why foreclose if you paid cash?

[Shalom Benton]

Riddle me this:

I recently saw this happen but I can’t figure out what the loophole is....

A trust fund baby purchases home #1 in cash for 50k. Lives in it for a few years. Buys home #2 in cash. Moves into it. A year later, Buys home number #3 (a mansion), and then the bank forecloses on home #1 and lists it for sale.

What is the loophole? Why would a wealthy person, who paid cash for a home, foreclose...? instead of just selling it?

I’m interested to know your wild ideas on what the loophole could be. Personally, I don’t know the answer. But I have my own guesses haha

[Don Konipol]

@Shalom Benton

If the buyer paid cash for the home, their would be no mortgage and hence no foreclosure by a lender. There may be unpaid property taxes, or a judgement which could be the basis for a foreclosure action. Or the owner may have taken a loan secured by the property after the cash purchase.

My best guess would be that you’re not in possession of all the facts. The reasons for financial problems are numerous and varied. Rarely is a sophisticated strategy involved. Normally the result of poor financial management or a life out of control.