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DEADBEAT MILLIONAIRES: Biggest Defaulters On Mortgages Are The Rich

Editor's Note: We are reposting this story for anyone who missed it the first time around.

In certain cases, walking away and sending jingle mail to your bank is the smartest and most rational option facing mortgage holders in a dead market.  Banks themselves do not hesitate to walk away from billion-dollar CRE projects, so why should you be expected to behave any differently if it's in your best interest.  Don't fall for the guilt trip.  Do what is right for you and your situation.


Walking Away From Million-Dollar Mortgages

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.”

Continue reading (there's much more)...



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Reader Comments (7)

Note that Morgan Stanley is current on the loan and is not in foreclosure. They are simply "walking away" because the buildings are worth less than the amount owed.

Jul 11, 2010 at 2:39 PM | Registered CommenterDailyBail
Maybe Obama's civilian army could move in like our troops used Saddam's homes. What's your bet that the Obama thugs are already on the case.
Jul 11, 2010 at 2:54 PM | Unregistered CommenterZ
A three page article about Volcker that doesn't mention the Group of Thirty?
His trip to the Bilderberg meeting?
No mention of his violation of the Logan Act?
No mention of the New World Order?
Trilateral Commission???
Council on Foreign Relations???

Ohhhhh, NYT...tssk tssk.


I tore this video apart a while back showing what a snake Volcker is.

Again, this is all I have to say to the investigative reporter (ha ha) at NYT...

Jul 11, 2010 at 5:26 PM | Unregistered CommenterZ
Secret gold swap has spooked the market


In a tiny footnote in its annual report, the bank disclosed its unusually large holding of gold, compared with nothing the year before.

This did nothing to quell the sense of mystery surrounding the deal or deals. It is almost inconceivable that a single commercial bank could have accumulated so much gold alone. And cynics have suggested that the whole affair still looks like a secretive European bailout that a single country wants to keep quiet.

Central Banks Swap Tons of Gold for Cash

All of this is being done in the shadows. Apparently central bankers want to keep a low profile. They can easily get cash from the BIS without notice. Gold swaps with the BIS are also cheaper that commercial loans.
Jul 12, 2010 at 12:14 AM | Unregistered CommenterZ

Nearly one in five delinquent mortgages through the first half of 2009 was owned by someone who could afford to pay, but decided defaulting was a smarter financial play.
Jul 12, 2010 at 3:19 AM | Registered CommenterDailyBail

I cut meat for a living, but I've never been able to shake my compulsion to write. During my apprenticeship at Fleisher's Meats—the first local, sustainable butcher shop on the East Coast—I found myself spending every evening hunched over my laptop, pecking away with bandaged fingers a chronicle of becoming a butcher that would later run in Meatpaper magazine. While I cut my teeth, butchering in a meat locker the size of a closet at the restaurant Marlow and Sons, I was also a contributing editor to its food magazine, Diner Journal. So it seemed only natural that, in the midst of a Herculean effort to open a 7000-square-foot cooking school and butcher shop in the middle of a recession, I would take on the task of writing about what I do for the Atlantic Food Channel.
Jul 12, 2010 at 3:20 AM | Registered CommenterDailyBail
Speaking of deadbeat millionaires, one of the scumbuckets from Real Wives of NJ along with her husband recently declared bankruptcy. HE was apparently involved in several RE swindles that provided the lavish lifestyle depicted in the program. Isn't that just GRAND? They FLAUNT their ill-gotten gains while the media LIONIZES them, to boot.

What a country.

I mean, what an EX country.
Jul 12, 2010 at 3:50 AM | Unregistered CommenterRecoverylessRecovery

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