Higher Priced Homes Leading Strategic Defaults

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EDITOR’S COMMENT: High priced homes are coming onto the auction block at an increasing pace. The homes were in many cases falsely valued and now are appraised at huge discounts (call that losses) from the purchase price or last refinance.

As the numbers roll in, people are rolling out, taking short-sales or just walking away in a strategic default. Faced with the option of either paying a mortgage loan that has no value, homeowners are opting out.

The more difficult stories to hear are those who sold everything, liquidating retirement funds in order to do the impossible — pay a mortgage than can’t be paid.

by Pete Carey, Mercurynews.com

The housing crisis, which first devastated borrowers who purchased lower-cost homes with subprime loans, has caught up with people whose wealth helped them hang onto their houses longer.

Throughout affluent communities in the Bay Area, million-dollar-and-up homes are increasingly being lost to foreclosure, or sold as a last resort for far less than their mortgages.

More than 1,500 Bay Area homes with mortgages of $1 million or more were scheduled for auction last year, more than double the number in 2008, according to ForeclosureRadar, a foreclosure tracking service.

“The fact is, upper-end folks are starting to feel the crunch,” said Barbara Safran, president of the Contra Costa County Association of Realtors.

Santa Clara County had more than 400 homes valued at $1 million or more scheduled for auction in 2011, the most of six Bay Area counties.

Anne Walker of Coldwell Banker in Cupertino has a $1.7 million foreclosure listing in wealthy Monte Sereno. Like others in their situation, the former owners have no interest in talking about it publicly.

“Most of these higher-end people are, like, 45 years old plus, and they’ve gone through all their assets,” Walker said. “It’s a really devastating situation for them. They thought they had planned. They had their kids’ college fund, they had their 401(k)s, the stock, the mutual funds, and they’ve been hanging on for the last three years. They’ve gone through everything….

Tags: appraisal fraud, auction fraud, foreclosure fraud, FORECLOSURE SETTLEMENT, foreclosures, housing market, housing prices, investors, mortgage fruad, mortgages, settlement, strategic default
Posted in bubble, Corruption, Eviction, securities fraud |