Legal Question in Real Estate Law in California

I am not clear on the facts. In the first sentence of your question, you say your wife owns a home. Then, in the third to last sentence, you ask if it is OK "for me" to buy a second home, then you mention "our" existing property.

Also, I'm wondering who is responsible for the fraudulent paperwork with incorrect income figures....you, your wife, or a loan arranger or broker? In general, it's risky to do anything with a loan obtained with a fraudulent application except to pay it in full, because you can be sued for the fraud without much help from the antideficiency statutes.

As far as buying a second home, moving, and then dumping the upside-down house by short sale or foreclosure, I can't think of anything that makes it illegal per se, but if you have to conceal any facts from anyone involved - the VA, the seller, the lender on the previous house, ro your wife - that would taint the deal and probably introduce some illegality. In particular, I'd be concerned about a possible lender investigation of the existing loan and also whether the VA loan to you would go through if your wife is in default. I assume the VA lender would inquire about her finances as well as yours, since the loan payments would be made (at least in part, I would assume) with community income.