Biggest Defaulters on Mortgages Are the Rich

[Crystal Clarity]

It appears that finger wagging only applies to us, not them ... :grr:

Peter DaSilva for The New York Times:

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley. Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

<<<snip>>>

The CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default. The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent.

<<<snip>>>

“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006. “I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.”

The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults. “They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.

http://www.nytimes.com/2010/07/09/business/economy/09rich.html?pagewanted=2&_r=1

[Skink]

1. These people know they got suckered on their ARMS.

atleast they are able to fight back.

[stray cat]

2. DU has promoted walking away from underwater property so cheer them on!

[notesdev]

3. And now for the real story

During the bubble there were a LOT of middle class/upper middle class people who bought $1m homes... you should see some of the pieces of shit that were priced in that range, especially in California and Florida.

These people are all fucked now. Whatever "high net worth" they used to have was directly attributable to bubble-priced housing, and their net worth crashed with it. Bet you dollars to donuts that 90% of the people who defaulted on $1m mortgages have next to nothing left anymore.

The truly rich would sneeze at a million dollars. What we are seeing here is the Icarus trail of the former upper middle class.

It's ironic how so much of what is aimed at the rich in the name of justice and egalitarianism ends up missing the really rich entirely, landing squarely on the upper middle class. Remember, the really rich can buy themselves laws.

[TwilightGardener]

5. Yep--million-dollar homes in CA are probably not as much the realm of

the wealthy as million-dollar homes might be in Tennessee, or Ohio, or New Mexico. I'd bet many of them were just the most extreme cases of overreaching (by bank, broker and themselves) in terms of having qualifying income. Probably a lot of them were house-rich, everything-else poor. Until the bubble popped, and then they weren't house-rich anymore.

[Curmudgeoness]

4. And I'll bet the amount of those mortgages are a lot higher too.

Why am I not surprised! This is a "business strategy" taught in business schools these days---cut your loses, file for bankruptcy and start another business without thinking about it. Same would go with everything in their lives. Shit on them.