Biggest Defaulters on Mortgages Are the Rich - GoFuckYourself.com

TheSenator · 07-12-2010, 01:14 PM

The rich are walking away from mortgages that are underwater as a business decision. The middle class are doing the same but it is called a criminal activity.

Source: http://www.nytimes.com/2010/07/09/bu...ch.html?src=mv
============================================
Biggest Defaulters on Mortgages Are the Rich
By DAVID STREITFELD

LOS ALTOS, Calif. ? No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

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.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

?The rich are different: they are more ruthless,? said Sam Khater, CoreLogic?s senior economist.

Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.

Not so long ago, said Chris Redden, the paper?s advertising services director, ?it was a surprise if we had one foreclosure a month.?

The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago ? like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.

In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.

?I?ve never seen the wealthy hit like this before,? Mr. Lowman said. ?They made their plans based on the best of all possible scenarios ? that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.?

The defaulting owners, he said, often remain as long as they can. ?They?re in denial,? he said.

Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.

At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.

At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.

Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.

Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them.

In a recent column on Freddie Mac?s Web site, the company?s executive vice president, Don Bisenius, acknowledged that walking away ?might well be a good decision for certain borrowers? but argues that those who do it are trashing their communities.

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. For cheaper investment homes, it is about 10 percent.

With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.

?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.

The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process.

In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.

In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008.

The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two.

The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch.

But this is still Silicon Valley, where failure can always be considered a prelude to success.

In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing.

His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called ?the global meltdown,? the man, a technology entrepreneur, said he quit making his $9,000 monthly payments.

?I?m going to be downsizing,? he said.

The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. ?I?m a businessman,? he explained. ?I have to be upbeat.?

Carol Pogash contributed reporting.
source: http://www.nytimes.com/2010/07/09/bu...ch.html?src=mv
================================================

Support the rich and extend the Bush tax cuts.

Barefootsies · 07-12-2010, 01:21 PM

Sweet justice.

IllTestYourGirls · 07-12-2010, 01:21 PM

I stopped reading the propaganda piece at this point

Quote:

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment

baddog · 07-12-2010, 01:25 PM

Quote:

Originally Posted by TheSenator

The middle class are doing the same but it is called a criminal activity.

Where did you come up with that?

JFK · 07-12-2010, 01:30 PM

long read

BestXXXPorn · 07-12-2010, 01:37 PM

Everything is fucking relative...

Everyone lives at the top (or near) of their means... I don't understand how people can't fathom that when you make $50k, you may have a $200k mortgage... when you make $500k, you may have a $2M mortgage...

When times are tough and you can't afford your mortgage, the same thing could happen to either person... a $2M mortgage is serious fucking business... It's not like you can just "work more hours" at that level or "get a second job"... Most likely you're already a business owner and that's where your money is coming from.

Sometimes to keep the business you've gotta make sacrifices... if that means ditching a home you can no longer afford the mortgage on, you gotta do what you gotta do. Especially when you're supporting multiple employees.

I would argue that the people in default on their mortgages at the bottom of the rung... could EASILY go out and get another job or work day labor.

mgtarheels · 07-12-2010, 01:42 PM

It's a good decision to let it go.

BFT3K · 07-12-2010, 01:43 PM

Rich Defaulting at Highest Rate...

http://www.nakedcapitalism.com/2010/...hest-rate.html

There are plenty of articles about this, but if it doesn't support your agenda, then I suppose you can just ignore the facts. It's probably Obama's fault, right?

IllTestYourGirls · 07-12-2010, 01:48 PM

Quote:

Originally Posted by BFT3K

Rich Defaulting at Highest Rate...

http://www.nakedcapitalism.com/2010/...hest-rate.html

There are plenty of articles about this, but if it doesn't support your agenda, then I suppose you can just ignore the facts. It's probably Obama's fault, right?

No it does not fit your agenda so you are trying to twist it so it does. This is just proof that the recession is hitting the richest the hardest and now you want to blame it on them and tax them to death, causing more foreclosures. Good line of thinking you got going on there

mynameisjim · 07-12-2010, 01:48 PM

Wealthy people and companies walk away from contracts and obligations all the time when they are no longer beneficial to them. I'm glad middle class folks are starting to realize that.

I'll just use this example because people will recognize the name. But Donald Trump was unable to make the interest payments on his new building in Chicago, so HE sued the banks for not letting him negotiate new, lower terms. So basically, he couldn't pay his bills so he sued his creditors claiming they asked for too much money. Money he agreed to pay at one point..lol. That's business as usual.

Now, there are long term ethical issues and social consequences when the working class begins to behave like the wealthy class, but that's a different story all together.

kane · 07-12-2010, 01:49 PM

I had read a while back that 1 in every 10 homes currently being foreclosed on were seconds homes or were purchased with the intent of it being an income property.

A lot of people thought they were going to make some easy money with the ballooning housing market and got found out it isn't that easy.

There was also a story about 6 months ago where people in California were doing something called buy and bail. The example they gave was a woman who owned a house that she bought for 400K in Stockton. The house was now worth about 225K, but when her variable rate mortgage unlocked her house payments were going to double in size. She filed papers saying she was going to rent this house for at least 80% of the mortgage amount then bought a new house before she was in default with the old one. This new house was almost the same, but cost her half as much. Once the deal for the new house was done she walked away from the other one and let them take it.

07-12-2010, 01:14 PM	#1
TheSenator Too lazy to set a custom title Industry Role: Join Date: Feb 2003 Location: NJ Posts: 13,332	Biggest Defaulters on Mortgages Are the Rich The rich are walking away from mortgages that are underwater as a business decision. The middle class are doing the same but it is called a criminal activity. Source: http://www.nytimes.com/2010/07/09/bu...ch.html?src=mv ============================================ Biggest Defaulters on Mortgages Are the Rich By DAVID STREITFELD LOS ALTOS, Calif. ? No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars. 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. More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic. By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent. Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment. ?The rich are different: they are more ruthless,? said Sam Khater, CoreLogic?s senior economist. Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million. Not so long ago, said Chris Redden, the paper?s advertising services director, ?it was a surprise if we had one foreclosure a month.? The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago ? like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely. In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties. ?I?ve never seen the wealthy hit like this before,? Mr. Lowman said. ?They made their plans based on the best of all possible scenarios ? that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.? The defaulting owners, he said, often remain as long as they can. ?They?re in denial,? he said. Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail. At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend. At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor. Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months. Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them. In a recent column on Freddie Mac?s Web site, the company?s executive vice president, Don Bisenius, acknowledged that walking away ?might well be a good decision for certain borrowers? but argues that those who do it are trashing their communities. 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. For cheaper investment homes, it is about 10 percent. With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans. ?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. The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process. In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick. In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008. The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two. The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch. But this is still Silicon Valley, where failure can always be considered a prelude to success. In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing. His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called ?the global meltdown,? the man, a technology entrepreneur, said he quit making his $9,000 monthly payments. ?I?m going to be downsizing,? he said. The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. ?I?m a businessman,? he explained. ?I have to be upbeat.? Carol Pogash contributed reporting. source: http://www.nytimes.com/2010/07/09/bu...ch.html?src=mv ================================================ Support the rich and extend the Bush tax cuts. __________________ ISeekGirls.com since 2005

07-12-2010, 01:21 PM	#2
Barefootsies Choice is an Illusion Industry Role: Join Date: Feb 2005 Location: Land of Obama Posts: 42,635	Sweet justice. __________________ Should You Email Your Members? Link1 \| Link2 \| Link3 Enough Said. "Would you rather live like a king for a year or like a prince forever?"

07-12-2010, 01:30 PM	#5
JFK FUBAR the ORIGINATOR Industry Role: Join Date: Jan 2002 Location: FUBARLAND Posts: 67,374	long read __________________ FUBAR Webmasters - The FUBAR Times - FUBAR Webmasters Mobile - FUBARTV.XXX For promo opps contact jfk at fubarwebmasters dot com

07-12-2010, 01:37 PM	#6
BestXXXPorn Confirmed User Join Date: Jun 2009 Location: Asheville, NC Posts: 2,277	Everything is fucking relative... Everyone lives at the top (or near) of their means... I don't understand how people can't fathom that when you make $50k, you may have a $200k mortgage... when you make $500k, you may have a $2M mortgage... When times are tough and you can't afford your mortgage, the same thing could happen to either person... a $2M mortgage is serious fucking business... It's not like you can just "work more hours" at that level or "get a second job"... Most likely you're already a business owner and that's where your money is coming from. Sometimes to keep the business you've gotta make sacrifices... if that means ditching a home you can no longer afford the mortgage on, you gotta do what you gotta do. Especially when you're supporting multiple employees. I would argue that the people in default on their mortgages at the bottom of the rung... could EASILY go out and get another job or work day labor. __________________ ICQ: 258-202-811 \| Email: eric{at}bestxxxporn.com

07-12-2010, 01:48 PM	#10
mynameisjim Confirmed User Join Date: Aug 2007 Posts: 2,985	Wealthy people and companies walk away from contracts and obligations all the time when they are no longer beneficial to them. I'm glad middle class folks are starting to realize that. I'll just use this example because people will recognize the name. But Donald Trump was unable to make the interest payments on his new building in Chicago, so HE sued the banks for not letting him negotiate new, lower terms. So basically, he couldn't pay his bills so he sued his creditors claiming they asked for too much money. Money he agreed to pay at one point..lol. That's business as usual. Now, there are long term ethical issues and social consequences when the working class begins to behave like the wealthy class, but that's a different story all together. __________________ jim (at) amateursconvert . com Amateurs Convert

07-12-2010, 01:42 PM	#7
mgtarheels Confirmed User Industry Role: Join Date: Mar 2010 Location: Daytona Beach, FL Posts: 1,317	It's a good decision to let it go.

07-12-2010, 01:43 PM	#8
BFT3K Too lazy to set a custom title Industry Role: Join Date: Dec 2005 Location: Narnia Posts: 10,764	Rich Defaulting at Highest Rate... http://www.nakedcapitalism.com/2010/...hest-rate.html There are plenty of articles about this, but if it doesn't support your agenda, then I suppose you can just ignore the facts. It's probably Obama's fault, right?

07-12-2010, 01:49 PM	#11
kane Too lazy to set a custom title Join Date: Aug 2001 Location: portland, OR Posts: 20,684	I had read a while back that 1 in every 10 homes currently being foreclosed on were seconds homes or were purchased with the intent of it being an income property. A lot of people thought they were going to make some easy money with the ballooning housing market and got found out it isn't that easy. There was also a story about 6 months ago where people in California were doing something called buy and bail. The example they gave was a woman who owned a house that she bought for 400K in Stockton. The house was now worth about 225K, but when her variable rate mortgage unlocked her house payments were going to double in size. She filed papers saying she was going to rent this house for at least 80% of the mortgage amount then bought a new house before she was in default with the old one. This new house was almost the same, but cost her half as much. Once the deal for the new house was done she walked away from the other one and let them take it.