The very rich are now defaulting on mortgages in higher percentages than any other income group. The rich are beginning to lose to foreclosure their primary residences in high value areas like the Silicon Valley in California and high end suburbs of Chicago, as well as their second homes in vacation paradise areas like Florida, Arizona and Nevada. They are also losing their income-generating property.
This presents a perfect opportunity for Short Sale specialists to mine data lists luxury home and income property notice of defaults, absentee owner records, and high end listings from Agents in areas where values have fallen dramatically.
Many of these individuals were able to hold out longer than those at lower and middle class income levels, often renting out properties for far less than expenses. Job and investment losses combined by little prospect of a quick recovery have driven many of these higher income individuals to decide to stop paying mortgages on their properties.
According to CoreLogic one in seven mortgages of $1 million or more are now in default compared to one in 12 mortgages below the $1 million mark. CoreLogic says the delinquency rate on investment homes of over $1 million is 23% compared to 10% on investment homes valued at less than $1 million.
There is evidence that many of these high end homeowners are strategically defaulting, although this is hard to verify. The very rich are more likely to consider property decisions as bottom line business decisions than the average homeowner. Many will simply eliminate assets that do not contribute to their bottom line.