Jul 28 2010
The Wealthy Strategic Defaulters
We have some first-class stuff today. Reading the New York Times this morning, we noticed that we are hearing the phrase “strategic default” a lot more recently. Strategic default is mainly letting your house go into foreclosure. The home owner chooses not to make payments because the worth of your home has gone down. The home owner might also not be making payments since eventually they will not be able to make payments. So they are just speeding up the predictable.
Core Logic came up with some remarkable statistics on what the wealthy are doing with their cash and what some of the middle class are doing with their money. More than one in seven house owners with million dollar loans are seriously deliquent. Below a million dollars, the data are just one in twelve homes. Core Logic chief economists deem that the rich are a little more merciless. Fannie Mae and Freddie Mac are begging home owners to keep making their mortgage payments, but the affluent are not obliged to do so.
Investment houses with an original mortgage over a million dollars, have a deliquency rate is 23%. For cheaper investments the deliquency ratio is around 10%. The affluent and successful are less prone to the shame and fear mongering used by the government and mortage lending industry to keep underwater home owners from acting in their financial best interest.
It is interesting that the commentary says bad stuff about the wealthy making this business decision. Many banks are addressing strategic default. We don’t make a stand on either side of it. Nevertheless, the affluent are making a good business decision. If the middle class was a little more financially skilled, maybe they would make the identical decision.
Get more help from short sale Realtors, Josh and Sarah, at Short Sale Shift presented by the Short Sale Specialists of Minnesota
