Posted on 07/10/2010 11:09:10 PM PDT by jerry557
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 is 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.
(Excerpt) Read more at finance.yahoo.com ...
Because they didn’t get rich by being dumb & holding onto an artificially inflated house.
It’s not illegal, it’s a contract - and the contract allows this possibility.
America is built on contract law. But still most people don’t look at the contract - they have their own assumptions about their rights & responsibilities, which are not correct.
Unless they’re falsely declaring bankrupcy, I don’t personally see a problem with it.
An interesting exercise would be to map out the country, color coded state by state, indicating rate of foreclosure. You’d see that the law dictating consequences of default has a great deal to do with it.
Non-recourse states, permitting mortgage holders to fulfill the contract merely by returning the house to the lender, would stand out like a sore thumb, even moreso than economically ravaged states. Those that are both would be off the charts. Those that allow deficiency judgment, even economically ravaged ones, would be far more modest.
The statistics lie when spread out across such a very diverse landscape. Pin the problem to the source(s). Then, we’ll see. Another state by state trend would illustrate a political hotbutton issue that correlates very well with a high rate of foreclosure, and that would be illegal immigration.
Which, in turn, leads to those financial institutions that encouraged no-doc lending and lending to illegal immigrants. It starts to look like collusion to rape the financial system, if laid out all neat and orderly so people can play with the the legalities and the consequences, jurisdiction by jurisdiction.
The bottom line, it makes a whole lot more sense for people to walk than to pay on a house that is not going to be worth the purchase price for years (a decade?).
I don't think it happened by plan if that is what you are suggesting.
The bottom line, it makes a whole lot more sense for people to walk than to pay on a house that is not going to be worth the purchase price for years (a decade?).
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Most of those million dollar mortgages are held by business people, who in good times can afford the payment, but when the business stops producing income, have to choose between paying the mortgage or paying their employees.
Another dig by the liberals those EVIL rich. But its ok for the Rats to not pay their taxes.
Yep... streisand, cameron, stone etc etc etc.
LLS
Funny how the super-rich and the poor vote Dem.
Two classes of people who don’t bust their butts to earn a living.
I would not be so quick to accept the conclusion of the reporter. A person selling a home they bought for 200k at 400k would have been able to get a mortgage over a million a few years ago.
Hell there was a story back in 08 about a family of 4 making 80k a year by holding 3 jobs owning a home in Cali that they purchased for over 800k.
bookmark
The plan was to increase the proportion of home ownership in the country. When you look at the paltry increase achieved by bubblenomics, many were subjected to the pain of artificially inflated housing prices and elevated mortgage rates for damn near no gain for the progressive agenda. The only gain I see is America’s financial system is being dismantled.
when they mention all those empty storefronts, do they wonder who owned them?
The contract and the agreement was to pay back the loan or be faithful to your wife.
If you do not keep your word there may be terms in the contract as to what happens, but it is Clintonisque to call breaking a contract, keeping it.
Yep! It looks like you’re right:
http://ai.cs.utsa.edu/wikipedia0.7/A/Sa/Santa_Clara_County%252C_California.html#Politics
Note: In the article, it mentions Los Altos Hills as having more registered Republicans than Democrats but Los Altos Hills is the next city over from Los Altos - Los Altos has more registered Democrats than Republicans.
I saw a comment like that on another discussion board, the guy was saying the we should find out the Zip codes of all the towns discussed in the article (such as Los Altos, CA) and put them into an Open Secrets donor search. He said that all the towns discussed in the article are "Democratic Party strongholds."
Bigger defaults because the dollar amounts of the mortgages are bigger, maybe? Kinda stands to reason. The mortage on the Sears Tower is kinda large, and has been in default more than once. Things happen.
“it is Clintonisque to call breaking a contract, keeping it.”
I agree. Even though it may not be as bad as declaring bankruptcy, I would hope that those walking away from upside down houses would get dinged pretty badly on their credit record. If I were a bank, I’d certainly hesitate to lend any amount to such individuals again, since their own actions have suggested they are a greater credit risk than someone who takes obligations more seriously.
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