Luxury Homeowners in U.S. Use 'Short Sales' as Defaults Rise

Business Week ^ | 17 December 2009 | Kathleen M. Howley and Dan Levy

[Lorianne]

Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.

"The rich aren't as rich as they used to be," said Alex Rodriguez, a Miami real estate agent with JM Group USA Inc., whose listings include a $2.9 million property marketed as a short sale because the price is less than the mortgage, leaving the bank with a loss. "People have reached the point where they can't afford the carrying expenses of a $2 million home."

Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a Santa Ana, California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier.

[darkwing104]

I wonder how many of them voted for Obama...

[WashingtonSource]

These are all Obama voters

[Uncle Miltie]

I bought in a short sale at a 28% discount to the market top.

Probably could’ve done a little better by now.

[dk88]

"The rich aren't as rich as they used to be,"
Well, I think that was the idea.

[maine yankee]

spreadin’ the wealth around !

[allmendream]

Ug. I was forced to “short sale” on a half million dollar home in San Diego to move for work. The 60,000 loss the mortgage company took was counted as a “gift” to me that the state of CA wanted to TAX!!! I still owe money on a house I no longer own. Talk about adding insult to injury.

At this point I think I should have just let them foreclose.

[Osage Orange]

Sorry to hear my FRiend......

You took the "high" road and got the shaft.............

[Osage Orange]

Forgot to say....I've been there.

Meaning tried to do what I thought was honorable and right....but got screwed doing it.

[Graybeard58]

The 60,000 loss the mortgage company took was counted as a “gift” to me that the state of CA wanted to TAX!!! I still owe money on a house I no longer own. Talk about adding insult to injury.

If you still owe it and pay it back, how can it be considered a "gift". I can see owing taxes if you don't pay it back though.

[allmendream]

Because the Mortgage company “forgave” that debt by accepting less than I owed, that counts as a “gift”.

Most states conformed with the fed’s when they said they were not going to tax that anymore, but not California. *$&#%^@**