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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe wealthy are walking away
Those who appear to have money are defaulting on their mortgages faster than any other group. Yes, weve written about this in the past Los Altos Hills standing out for million dollar foreclosures and those who choose to walk away typically have higher credit and deeper pockets than most.
And the trend is continuing as CNNMoney recently points out.
What still isnt new is the fact that these million dollar defaulters are choosing to walk away and possibly recoup what they may have lost on their home with some free rent.
On average, it takes about 348 days for a foreclosure to be completed, They may get almost a year of free housing out of the deal.
more
http://blog.sfgate.com/ontheblock/2012/02/24/the-wealthy-are-walking-away/
Liberal_in_LA
(44,397 posts)Devil_Fish
(1,664 posts)The banks pumped the bubble. When it poped, how can the buyer be blamed for excersizing their contract option of simply giving the house back to the bank. Not their falt that the house in now worth less then the bank is owed.
gratuitous
(82,849 posts)When po' folk do it, it's because they're deadbeats. Once again we see the application of a different standard based solely on a person's actual or perceived economic standing. I remember there's a word or a phrase for that, but I just can't bring it to mind. "Class" something or other. I used to hear it all the time during the Occupy demonstrations, but then it was because the aforementioned po' folk were the ones complaining about the system and the way it's rigged.
Dang! I wish I could remember.
abelenkpe
(9,933 posts)peacebird
(14,195 posts)Hassin Bin Sober
(26,344 posts)... and running corporations through the bankruptcy courts.
How many mortgage loans and rental agreements did old Mittens stategically default on?
Behind all the "re-structurings" there has to be literally hundreds of burned creditors. Probably all public records for anyone who wants to look.
B Calm
(28,762 posts)dixiegrrrrl
(60,010 posts)It's...different....for people like him.
Trillo
(9,154 posts)Sirveri
(4,517 posts)Can't have that now, can't risk supporting that just to help the poor.
handmade34
(22,758 posts)double standards...
hypocrisy...
rich get richer, poor get poorer...
takes money to make money...
class system...
the American Dream?...
what? you talking about inequality? this is America, get used to it...
business sense?...
???
the poor are screwed...
....
cyberpj
(10,794 posts)allow mortgage companies to come after you if/when you buy another residence.
former9thward
(32,082 posts)They can go after your bank accounts, wage garnishments, assets, just like any other debt.
cyberpj
(10,794 posts)if you're THAT wealthy, huh?
former9thward
(32,082 posts)It takes a hit but why do they care? They can just pay cash or use shell companies to buy what they want.
Ruby the Liberal
(26,219 posts)limited partnerships as opposed to borrower's name?
So they dissolve it, write off the loss and move on.
xchrom
(108,903 posts)Yo_Mama
(8,303 posts)Of course if you cashed out you've got a potential judgment if you have the assets.
But in CA the lender has to pursue judicial foreclosure to get a deficiency judgment, which is uncommon. Of course if you have substantial other non-retirement assets and you cashed out to get the mortgage balance that high, a lender might decide pursuing judicial foreclosure was worth it, particularly if you are basically screwing the lender without an attempt to mitigate the loss.
A lot of people with close to million-dollar mortgages in CA aren't that wealthy, though. The funny-money mortgages allowed homeowners to cash out and really rack up the mortgage debt for things like college tuition - if you don't even have to pay the interest accruing on the mortgage for years, you could take out a pretty high mortgage in CA if your house had appreciated. Houses bought for 200 - 350K were out there with 800K - 1.2 mil mortgages based on appraised values which have tuned out to be ephemeral.
AnotherMcIntosh
(11,064 posts)See, generally, CCP 580b, 580d, and 580e.
There are exceptions, however.
FarCenter
(19,429 posts)They also have the highest rates of foreclosure and biggest drops in home value. They are the home of "jingle mail", where the owners mail the keys to the lender.
Other states where mortgages are discharged in bankruptcy have less of a problem. Homeowners are stuck with underwater mortgages with high interest rates unless they go bankrupt.
nanabugg
(2,198 posts)I was familiar with our credit union in the late 90's. The highest percent of people who did not repay auto or personal loans were the folks at the top of the management chain, including many scientists. Yet the lower level workers had to almost sign away their birthright to get an unsecured loan. For most really working poor, their home is their greatest investment and mean to future security, therefore they will work two or three jobs if necessary to pay their mortgages. Of all the mortgage foreclosures I bet most had good paying jobs, fairly good credit scores, many assets. The working poor seldom file for bankruptcy because they can't afford the legal fees to do so. It's the so-called "middle" and upper classes that do this stuff regularly because they can...and a sizable number are repeat offenders.
cyberpj
(10,794 posts)shcrane71
(1,721 posts)using the "moral hazard". I guess some less wealthy people listened to him. But you're absolutely right, for most Americans not having a mortgage payment in retirement will be about the only thing that keeps us from abject poverty.
Trillo
(9,154 posts)If someone walks out on a high value mortgage, they may not have to pay $5000 per month, so that's $60K over one year, plenty for another place, if they can get another loan, or maybe they don't need a loan, and merely get one for the leverage it provides to their disposable. If a low-value mortgage exists, they may not have to pay $800-1200 per month, and only would be able to save, very roughly, $10K, which may not be enough for a new down payment, and they would also need a new loan.
Looking at those figures, I'm not at all sure it's in the poorer people's interest to not pay, but clearly it is for the wealthier folks' properties. So, once again, the system is rather clearly rigged to be more beneficial per owner for the wealthier to default, than the worker class, or even those that bought much more modest homes as a financial-survival strategy.
R.Blue
(35 posts)All the more reason to support OWS as these incidents only fuels the cause against the 1%.
sendero
(28,552 posts).... you may or may not have the legal right to "walk away" with no recourse for the lender.
The banks created this mess and while yes, "walking away" is not good for the housing market in general, I for one would never blame someone for doing so.
Why? Because it isn't people who bought houses (nobody buys a house expecting it to lose 25% of its value over the next few years) that created this scenario. It was the BANKS in collusion with a totally ineffectual government.
If I were in that situation, money or not, I would WALK, just like a banker would and does.
PotatoChip
(3,186 posts)This is infuriating.
sendero
(28,552 posts)... and liars believed by idiots.
As soon as someone mentions the CRA, you know they are a fucking moron.
KharmaTrain
(31,706 posts)My cousins live in an area that was in the midst of "gentrifying" when the bubble burst. Prior to '07 realtors and contractors couldn't build enough of these monsters...putting them up as fast as they could in hopes of roping in more people with those attractive low adjustable rates. The municipalities were anxious, too, cause they hoped to see more property taxes from these big ticket homes. Instead the neighborhood is dotted with empty monsters or properties in various shades of halted construction. The result has been a neighborhood that has seen its property values fall due to all the vacant properties.