Well, it looks like the the foreclosure virus is becoming more egalitarian every day; its even moving into tonier neighborhoods:RealtyTrac is forecasting that Houses with $5 million+ mortgages will likely be the next class of loans to go belly up.
While the overall numbers are small, they expect to see a sharp rise in foreclosures this year. In all of 2009, there were 1,312 houses with $5M+ mortgages scheduled for foreclosure auction. The spike is apparent this year — in the month of February alone, there were 352 homes nationwide in this category.
Here’s the Journal:
“Mortgage defaults began to surge in late 2006, mostly among borrowers with subprime mortgages, those for people with weak credit records or high ratios of debt to income.
Over the next few years defaults spread rapidly to better-heeled borrowers, especially those who got loans without documenting their income. At the end of 2009, nearly eight million households, or 15% of those with mortgages, were behind on mortgage payments or in the foreclosure process. . .
Big borrowers are more likely to default than ordinary people, according to data from First American CoreLogic. Its loan database, reflecting more than 80% of the overall home-loan market, includes 1,700 loans with balances of $4 million or more. About 14.8% of those loans were 90 days or more overdue at the end of January, compared with 8.7% for all home loans tracked by First American.”
It turns out that the wealthy are not any better at forecasting their own future economic circumstances than the unwashed masses were . . .
Foreclosures Hit Rich and Famous
CRAIG KARMIN And JAMES R. HAGERTY
WSJ, APRIL 9, 2010
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