High End Foreclosures Surge

[Arraya]

http://blogs.wsj.com/wealth/2010/06/29/mansion-foreclosures-surge/?source=patrick.net
For those who think all is well again in the world of Richistan, consider the following statistic.

The percentage of $1 million-plus loans more than 90 days delinquent rose to 13.3% in February, half again as high as the 8.6% overall delinquency rate, according to First American CoreLogic, which tracks U.S. real estate and mortgages.

The statistic, from this Reuters article, points to a sobering reality amid the happy talk of newly minted millionaires. Many affluent and wealthy can’t keep up with their mortgage payments.

Last month, there were 205 foreclosure filings for mortgages of $5 million or more, the third straight month such filings rose, according to RealtyTrac. The 205 foreclosures totaled $813 million.

“Early on in the crash, the weakness was in the lower-price tiers. In the past year, most of the biggest price declines have been in the upper tiers,” Mark Zandi, chief economist of Moody’s Analytics, told Reuters. “That suggests high-end households are coming under increasing pressure.”

Lenders to the wealthy are taking a hit. Bank of America’s U.S. Trust unit reported a nearly sixfold increase in its loan-loss provision in the first quarter, to $184 million from $31 million a year earlier. Net charge-offs at Northern Trust rose to $31 million from $2.7 million a year earlier, though they were down from the 2009 fourth quarter, according to Reuters.

While some say the weakness at the top is part of every economic cycle, real-estate experts say the mansion market has rarely if ever been hit so hard. “This recession is unlike prior recessions. It hit the high end just as much as the low end,” said Sam Khater, senior economist at CoreLogic.

Of course, the foreclosures could be the result of over-leveraged speculators and developers as opposed to once-wealthy families. Or it could be the result of a poor stock market in 2010, along with higher taxes.

Why do you think the mansion market is getting hit so hard even as the finances of the wealthy are reported to be improving?

[Nor-LA-SD-guy]

Yea that’s kind of what I have been seeing, the mid to high end in North county coming under pressure, (I have zero interest in anything south of Carlsbad to tell the truth).
From 500K to 1.3 or so mil.

The low end is still hanging around where it was a year ago but there is just a lot fewer bargains REO’s , and a few more not so nice ones.

[Nor-LA-SD-guy]

Yea that’s kind of what I have been seeing, the mid to high end in North county coming under pressure, (I have zero interest in anything south of Carlsbad to tell the truth).
From 500K to 1.3 or so mil.

The low end is still hanging around where it was a year ago but there is just a lot fewer bargains REO’s , and a few more not so nice ones.

[Nor-LA-SD-guy]

Yea that’s kind of what I have been seeing, the mid to high end in North county coming under pressure, (I have zero interest in anything south of Carlsbad to tell the truth).
From 500K to 1.3 or so mil.

The low end is still hanging around where it was a year ago but there is just a lot fewer bargains REO’s , and a few more not so nice ones.

[Nor-LA-SD-guy]

Yea that’s kind of what I have been seeing, the mid to high end in North county coming under pressure, (I have zero interest in anything south of Carlsbad to tell the truth).
From 500K to 1.3 or so mil.

The low end is still hanging around where it was a year ago but there is just a lot fewer bargains REO’s , and a few more not so nice ones.

[Nor-LA-SD-guy]

Yea that’s kind of what I have been seeing, the mid to high end in North county coming under pressure, (I have zero interest in anything south of Carlsbad to tell the truth).
From 500K to 1.3 or so mil.

The low end is still hanging around where it was a year ago but there is just a lot fewer bargains REO’s , and a few more not so nice ones.

[sdrealtor]

Seeing it also in NCC though its starting at higher levels than NLASDG indicated. Seems to be starting at prices between $1 and $2M. It might be happening above that also but I just dont watch that market as closely.

Its pretty much happening as we expected it would. The difference between this and the lower end is the volume is much smaller so even if the failure rate is fairly high, I dont know how much volume there is up there to push down on the mid-tier significantly.

[sdrealtor]

Seeing it also in NCC though its starting at higher levels than NLASDG indicated. Seems to be starting at prices between $1 and $2M. It might be happening above that also but I just dont watch that market as closely.

Its pretty much happening as we expected it would. The difference between this and the lower end is the volume is much smaller so even if the failure rate is fairly high, I dont know how much volume there is up there to push down on the mid-tier significantly.

[sdrealtor]

Seeing it also in NCC though its starting at higher levels than NLASDG indicated. Seems to be starting at prices between $1 and $2M. It might be happening above that also but I just dont watch that market as closely.

Its pretty much happening as we expected it would. The difference between this and the lower end is the volume is much smaller so even if the failure rate is fairly high, I dont know how much volume there is up there to push down on the mid-tier significantly.

[sdrealtor]

Seeing it also in NCC though its starting at higher levels than NLASDG indicated. Seems to be starting at prices between $1 and $2M. It might be happening above that also but I just dont watch that market as closely.

Its pretty much happening as we expected it would. The difference between this and the lower end is the volume is much smaller so even if the failure rate is fairly high, I dont know how much volume there is up there to push down on the mid-tier significantly.

[sdrealtor]

Seeing it also in NCC though its starting at higher levels than NLASDG indicated. Seems to be starting at prices between $1 and $2M. It might be happening above that also but I just dont watch that market as closely.

Its pretty much happening as we expected it would. The difference between this and the lower end is the volume is much smaller so even if the failure rate is fairly high, I dont know how much volume there is up there to push down on the mid-tier significantly.

[UCGal]

I’m curious how the high end is doing with loan mods.

Anecdotal – the house I’ve been following… bought in 2005 for 1.2M. NOD filed in Oct. 2009. NOT filed in Feb 2010. Put up for short sale in April 2010 – went contingent then pending pretty quickly.

But… the owner has couple of liens (tax and absentee judgment) so I assumed the short sale would not go through.

3 trustee sales postponed. Final one (end of June) shows the status as cancelled… so I assume the owner got a loan mod. But the NOT still shows (with no rescission.)

The outstanding debt was over $1M – so he didn’t qualify for HAMP based on loan size alone. Are banks offering loan mods to folks with that size loan? I guess they must be.

[UCGal]

I’m curious how the high end is doing with loan mods.

Anecdotal – the house I’ve been following… bought in 2005 for 1.2M. NOD filed in Oct. 2009. NOT filed in Feb 2010. Put up for short sale in April 2010 – went contingent then pending pretty quickly.

But… the owner has couple of liens (tax and absentee judgment) so I assumed the short sale would not go through.

3 trustee sales postponed. Final one (end of June) shows the status as cancelled… so I assume the owner got a loan mod. But the NOT still shows (with no rescission.)

The outstanding debt was over $1M – so he didn’t qualify for HAMP based on loan size alone. Are banks offering loan mods to folks with that size loan? I guess they must be.

[UCGal]

I’m curious how the high end is doing with loan mods.

Anecdotal – the house I’ve been following… bought in 2005 for 1.2M. NOD filed in Oct. 2009. NOT filed in Feb 2010. Put up for short sale in April 2010 – went contingent then pending pretty quickly.

But… the owner has couple of liens (tax and absentee judgment) so I assumed the short sale would not go through.

3 trustee sales postponed. Final one (end of June) shows the status as cancelled… so I assume the owner got a loan mod. But the NOT still shows (with no rescission.)

The outstanding debt was over $1M – so he didn’t qualify for HAMP based on loan size alone. Are banks offering loan mods to folks with that size loan? I guess they must be.

[UCGal]

I’m curious how the high end is doing with loan mods.

Anecdotal – the house I’ve been following… bought in 2005 for 1.2M. NOD filed in Oct. 2009. NOT filed in Feb 2010. Put up for short sale in April 2010 – went contingent then pending pretty quickly.

But… the owner has couple of liens (tax and absentee judgment) so I assumed the short sale would not go through.

3 trustee sales postponed. Final one (end of June) shows the status as cancelled… so I assume the owner got a loan mod. But the NOT still shows (with no rescission.)

The outstanding debt was over $1M – so he didn’t qualify for HAMP based on loan size alone. Are banks offering loan mods to folks with that size loan? I guess they must be.

[Author]

Posts