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Rich more likely to default on mortgages

By THE NEW YORK TIMES
July 9, 2010

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.

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.

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5 Responses to Rich more likely to default on mortgages

  1. woody188

    July 9, 2010 at 3:35 pm

    I’ve heard the uber-rich are just fine. A buddy in building supplies isn’t moving many fixtures, but the high end $1700 toilets are flying off the shelves. We are up to 10,000,000 millionaires nowadays, and they aren’t even considered rich by the roughly 3,000 grossly rich billionaires that control the media and governments world-wide. If carbon trading/cap & trade is allowed, they are saying we’ll see our banker buddies, energy executives, and Al Gore become the trillionaires of the world. They own 99% of the wealth while the bottom 50% fight over 1% and are waging a war of information and economics against the poor so they can have even more. Greed is good? Someone should have slapped that man.

  2. doggie daddy

    July 10, 2010 at 12:17 am

    They’re not more ruthless, the laws are written to favor those with higher incomes or with multiple properties.

    If your a middle class blue collar American and getting screwed over by the bank/mortgage company you have 3 choices – Abandon your property, Try to sell it or try to keep it thru so-called bankruptcy protection. I say so-called because the law is written to protect the banks interest and not the home owners.

    In 2005 as a senator from a state with few if any usury laws and while his son made millions as a bank lobbyist, Joe ‘Bite-Me’ Biden wrote the laws governing chapter 13 bankruptcy’s.

    Last year the messiah in chief after promising to overturn the law and help millions or Americans suffering, for various reasons, under these laws turned the whole program over the one person he felt could best handle it – Joe himself. And the chances of him overturning or amending the laws he wrote are what zero to negative nothing.

    Here in IL property taxes exploded and mortgage carriers took full advantage of the law and forced escrow accounts on millions of homeowners, basically forcing them into foreclosure and then bankruptcy, that is if they wanted to try and keep their homes.

    In case you didn’t know, you don’t walk away from debt in chapter 13 the debt is actually increased. Now, again under the new law, creditors are allowed to add additional fees and expenses unlike prior to the 2005 law. And it has to be paid in a shorter period.

    Most of us in bankruptcy don’t want to be there. We don’t want to erase our debt, it’s ours we’ll pay it. We didn’t over extend ourselves – we fell into a cycle of banking hell that the government is unwilling to address and help with.

    Last year the house passed HR1106 Helping Families Save Their Homes – Twice.
    And both times it was voted down by the dinosaurs in the senate. The temporary fix would allow a reduction in the monthly payment not the principal owed. But as my home senator Dick Lap-Dog Durbin told me “…the bank don’t like it”. So FU American. So your on your own. Do what you can or lose equity you’ve earned. Personally I work 3 jobs, my entire check from my 9 to 5 job which I have no taxes taken out of, goes to pay the mortgage. The 2 other jobs I need to by food and pay basic utilities on a home I’m never in and is basically worth nothing.

    I’d be happy to walk away, but the what? Lose 90K in equity? Try to find a place to rent with no credit or savings?

    I expected nothing for the perpetrators of HOPE and CHANGE and I haven’t been disappointed.

    • griff

      July 10, 2010 at 12:30 pm

      I’m currently in Chapter 13, much to my chagrin. We held off as long as we could but couldn’t stay above water. I’ve always paid my debts and we had sparkling credit and am quite dissatisfied we have to do this.

      When I built my home in 2006 it was valued at $196,000 while the costs ran well over $200,000. We borrowed $196, 000 (three mortgages) as costs skyrocketed in order to actually finish the house.

      Our assigned trustee has been very cooperative and amazingly helpful. Since the value of our home has dropped so significantly, he was able to include the second and third mortgages in the repayment plan as uncollateralized debt due to the fact that the banks would still get nothing any way if we were forced into foreclosure, which isn’t going to happen.

      We’ll end up repaying approximately four cents on the dollar owed and stay in the house that I spent two years building. It could have been worse, but I agree that the change in the laws was premeditated because all the “experts” couldn’t “foresee” what was coming. Yeah, right.

  3. griff

    July 10, 2010 at 1:05 pm

    Of course, it is always nice to see that our Political Class has no such worries.

  4. AustinRanter - AKA Gregg

    July 10, 2010 at 4:29 pm

    Nice looking pad. I mean, Clinton earned his money didn’t he? So why not spend it on really cool things?

    Surely there’s no dark side to any of his earnings…you know, something labeled as “ill-gotten” gains or such?

    Clinton didn’t invent it, but I think it’s a novel idea: Give me all of your money and I’ll tell you how to run your life.