www.banksters.us: The wealthy are walking away

The wealthy are walking away

Those who appear to have money are defaulting on their mortgages faster than any other group. Yes, we’ve written about this in the past – Los Altos Hills standing out for million dollar foreclosures and those who choose to walk away typically have higher credit and deeper pockets than most.

…the rate of default is one in seven for millionaire dollar plus mortgage holders while those with mortgages under this threshold is one in twelve.

And the trend is continuing as CNNMoney recently points out.

Out of all foreclosure activity, the share of foreclosures on properties valued at $1 million or more has risen by 115% since 2007 while the share of multi-million dollar foreclosures — or homes valued at more than $2 million — jumped by 273%. Meanwhile, the share of foreclosures on mid-range properties valued between $500,000 and $1 million fell by 21%.

What still isn’t new is the fact that these million dollar defaulters are choosing to walk away and possibly recoup what they may have lost on their home with some free rent.

“In the lower-priced houses you’ll see more people defaulting because they can’t afford the payments and it’s a choice between feeding their family and paying the mortgage on a home that’s under water,” said Stuart Vener, a national real estate and mortgage expert with the Florida-based Wilshire Holding Group.
“In million-dollar homes, you’re looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe?” he said. In many cases, it often makes more financial sense to walk away.
…On average, it takes about 348 days for a foreclosure to be completed,… “They may get almost a year of free housing out of the deal.”

The Bay Area isn’t immune to the national trend. While they don’t attribute the growing foreclosure rate in the high end of the housing market to strategic defaulters, The Mercury Newshighlights how the rate has jumped dramatically.

More than 1,500 Bay Area homes with mortgages of $1 million or more were scheduled for auction last year, more than double the number in 2008, according to ForeclosureRadar, a foreclosure tracking service.

Take a look at some recent Bay Area million dollar foreclosures:

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