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Foreclosures Up, The Rich Are Walking Away

From CNBC:

Foreclosures on the Rise Again

By: Diana Olick
Thursday, 16 Feb 2012

After a year-long reprieve from rising foreclosures, the numbers are going up again.

One in every 624 U.S. households received a foreclosure filing in January, up 3 percent from the previous month, according to a new report from RealtyTrac. Foreclosure activity froze in many states in 2011, due to processing delays after fraud, or so-called "Robo-signing," were uncovered in the fall of 2010. The thaw is now on.

As was predicted. (But enough with the "robo-signing" myth.)

[According to] RealtyTrac’s CEO Brandon Moore in a written release[:] "Foreclosure activity increased on a year-over-year basis for the first time in more than 12 months in Florida, Illinois, Indiana and Pennsylvania, following a pattern we saw in late 2011 in states such as California, Arizona and Massachusetts."

[T]hanks to the $26 billion dollar government-lender/servicer settlement… the wheels are turning again, and that means more bank repossessions and more foreclosed properties heading to the re-sale market

Meanwhile, we have this from Reuters:

The U.S. foreclosure crisis, Beverly Hills-style

Tim Reid
February 16, 2012

BEVERLY HILLS (Reuters) – …. Some 180 houses in Beverly Hills, the storied Los Angeles enclave rich with Hollywood stars and music moguls, have been foreclosed on by lenders, scheduled for auction, or served with a default notice, the highest level since the 2008 financial crash, according to a Reuters analysis of figures compiled by RealtyTrac, which tracks foreclosures nationwide…

The majority of delinquent homeowners here owe more than $1 million. Many are walking away not because they can’t pay, but because they judge it would be foolish to keep doing so.

"It’s a business decision, not an emotional one which it is for normal people," said Deborah Bremner, owner of the Bremner Group at Coldwell Banker, which specializes in high-end properties in the Los Angeles area. "I go to cocktail parties and all people are talking about is whether it is time to walk away, although they will never be quoted in the real world."

She said she had seen in Beverly Hills a big increase in "strategic defaults," in which owners who can still afford to make their monthly mortgage payment choose not to because the property is now worth so much less than the giant loan used to buy it during the housing bubble.

Absolutely. Why pay your debts?

Thank goodness these are the people who through their contributions to the movies and music set our ethical standards.

Strategic default is an especially appealing option in California, one of only a handful of U.S. states where primary mortgages made by banks are "non-recourse" loans. That means the loan is secured solely by the property, and banks cannot go after a delinquent owner’s wages or other assets if they default.

That is social justice. Banks are evil. Unless you need a loan.

Bremner said she helped a client buy a Beverly Hills mansion last year that the prior owner had bought for over $4 million. He decided to stop paying his $3 million mortgage – even though he could easily afford it – when the value of the property had dropped to $2.5 million.

"They were able to comfortably cover the loan," Bremner said. "They were just no longer willing to see the value of the property drop."

A huge "shadow inventory" is building of elite homes that are in default but have not been put on the market. Of the 180 distressed properties in Beverly Hills, only 12 are up for sale

But now the the historic $25 billion dollar shakedown of the banks settlement with the banks has been reached, it will be ‘Katie bar the door.’

Across the United States, the largest increase in foreclosures and delinquencies, compared with 2008 levels, is with "jumbo" mortgages – loans too large to be insured by Fannie Mae and Freddie Mac, the government controlled mortgage finance providers. Foreclosures on jumbo loans are up 579 percent since 2008, greater than any other form of loan, according to a report last month by Lender Processing Services, Inc.

Strategic defaults are now more likely among jumbo loan-holders than any other type of borrower, according to a report issued late last year by JPMorgan Chase & Co. Nearly 40 percent of delinquencies among non-governmental mortgages, which are mostly jumbo loans, are strategic defaults, the report said.

Luckily, the long suffering people behind these ‘jumbo mortgages’ will get a piece of the aforementioned $25 billion dollar settlement. Which every bank customer in the country will get to help pay for.

This article was posted by Steve on Thursday, February 16th, 2012. Comments are currently closed.

4 Responses to “Foreclosures Up, The Rich Are Walking Away”

  1. GetBackJack says:

    F. Scott Fitzgerald was right – the rich are different.

    It’s things liker this that give the Left and anti-capitalists all the ammunition they need for their Cause.

  2. mr_bill says:

    “It’s a business decision, not an emotional one which it is for normal people,” said Deborah Bremner, owner of the Bremner Group at Coldwell Banker, which specializes in high-end properties in the Los Angeles area. “I go to cocktail parties and all people are talking about is whether it is time to walk away, although they will never be quoted in the real world.”

    So the Beverly Hills folks are not “normal people” and they don’t live “in the real world.” Yeah, that about sums it up.

  3. Icarus says:

    Hey it’s been a while since I last visited…. looks like the more things change the more they stay the same. …NO not really! They’ve gotten a whole lot worse!

  4. Rusty Shackleford says:

    Now, this I can take seriously in the “Let’s Move” vein.


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