Archive for July 10th, 2010
July 10th, 2010 | 
Author: Kitchen and bath remodels usually recoup the highest percentage of the project investment. They also can be deal-breakers for potential buyers if these rooms are not updated.
Click here for some good tips on kitchen remodeling.
Posted in 
Tags: 
LOS ALTOS, Calif. – July 9, 2010 – Wealthy homeowners are defaulting on their mortgages at a higher rate than other segments of the population, according to the research firm CoreLogic.
More than one in seven borrowers with home loans of $1 million or more are seriously delinquent, according to research, compared to just one in 12 with mortgages for less than $1 million. The bottom line is the rich have stopped paying the mortgage on their residential, second home and investment properties at a rate that greatly exceeds the rest of the population.
According to the New York Times, CoreLogic economists speculate that well-off borrowers are making calculated moves to shed poorly performing real estate, just as they would any other soured investment. “The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist. Though hard to prove, the CoreLogic data suggest that the rich do not appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default.
The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.
With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.
“Those with high net worth have other resources to lean on if they get in trouble,” said Khater. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”
The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona, who studied strategic defaults.
“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” White said.
© 2010 Florida Realtors®