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The Wealthy Succumb to Foreclosures

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HIgh End Foreclosures


Although this is not directly related to rental properties, there’s been an interesting development on the foreclosure front – a spike in foreclosure numbers is being seen from a totally unexpected sector.

While middle income homeowners have been struggling to keep up with their mortgages since the beginning of the crisis, it is now the rich and the wealthy who are succumbing to these events.

Since 2007, foreclosures of mid-range properties have fallen by a healthy 21%, but foreclosures have shot up by 115% in homes valued in the $1 million range, and by an incredible 273% in homes valued at over $2 million.

So far, their asset portfolios have allowed the better off homeowners to weather the mortgage storm. Banks and lenders have also been more supportive and willing to work out alternatives because of the amounts at stake and the alternative resources available to these parties. None of this has substantially changed; the increase in foreclosures from these parties is coming because of the business decisions involved rather than any unendurable financial pressures. Wealthy home owners are choosing to walk away from their homes simply because their outstanding loans are amounting to much more than the current property values of their homes, and because a full real estate market recovery could potentially be years in coming.

Click to read the full CNN Money article that discusses these high end forclosures.

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