More Wealthy Default on Their Mansions The sub-prime crisis has turned into the super-prime crisis. Homeowners with mortgages of more than $1 millio

More Wealthy Default on Their Mansions

The sub-prime crisis has turned into the super-prime crisis.

Homeowners with mortgages of more than $1 million are now defaulting at nearly three times last year’s rate, according to a Bloomberg article.

Payments on about 12% of mortgages exceeding $1 million were 90 days or more overdue in September, up from 4.7% a year ago and well over the 7.4% default rate for U.S. mortgages as a whole. There are 114,000 home loans of more than $1 million.

“The rich aren’t as rich as they used to be,” Alex Rodriguez, a Miami real estate agent, was quoted as saying. “People have reached the point where they can’t afford the carrying expenses of a $2 million home.”

Or maybe the people who got $1 million mortgages weren’t rich to begin with and shouldn’t have gotten $1 million loans. Either way, short sales of pricey homes are becoming more common as more mansions go underwater.

“You are just starting to see the tip of the iceberg with luxury short sales,” said Adrian Heyman, owner of Property Advisors, a real estate broker in Scottsdale, Arizona. “A lot of wealthy people are upside down in their mortgages, and they just can’t afford the second or third vacation home anymore.”

The statistics suggest that for all the talk of stock-market rebounds and green shoots since early summer, the rich are still facing a cash crunch. And it shows that the wealthy - or aspirational wealthy — engaged in the same kind of leveraged-up, overbuilt lifestyle as the rest of the country.

Most importantly, it means that hopes that the rich will lead the country out of the real-estate crisis may be ill-founded. The wealthy will start buying real-estate when they stop defaulting.

Why do you think the wealthy are defaulting at such a high rate? Or are they?

http://blogs.wsj.com/wealth/2009/12/18/more-wealthy-default-on-their-mansions/?mod=rss_WSJBlog

The wealthy will only buy a property that they considered it a big discount, a real 'BARGAIN' to them.

Mortgage rate freeze reached

Today President Bush announced a big program for the relief of the Mortgage crunches for the homeowners. Here is the newsbrief:

Mortgage rate freeze reached

By MARTIN CRUTSINGER, AP Economics Writer
11 minutes ago


WASHINGTON - Hundreds of thousands of strapped homeowners could get some relief from a plan negotiated by the Bush administration to freeze interest rates on subprime mortgages that are scheduled to rise in the coming months

There is no perfect solution," President Bush said Thursday as he announced an agreement hammered out with the mortgage industry. "The homeowners deserve our help. The steps I've outlined today are a sensible response to a serious challenge."

Seeking to counter criticism he is violating his free-market principles, Bush said the private-sector plan does not represent the imposition of a government solution to the mortgage crisis.

"We should not bail out lenders, real estate speculators or those who made the reckless decision to buy a home they knew they could not afford," Bush said after meeting with industry leaders at the White House. "But there are some responsible homeowners who could avoid foreclosure with some assistance."

Bush said 1.2 million people could be eligible for help. But only a fraction will be subject to the rate freeze. Others would get assistance in refinancing with their lenders and moving into loans secured by the Federal Housing Administration, Bush said.

Also, the aid will only come to those who ask for it, he said. Thousands of borrowers who are falling behind on their payments have been sent letters about the options, and Bush also urged people to call a new hot line: 1-888-995-HOPE.

The announcement followed news earlier Thursday that home foreclosures surged to an all-time high in the July-September period. The Mortgage Bankers Association reported that the percentage of all mortgages that started the foreclosure process in the third quarter jumped to a record 0.78 percent. That top the mark of 0.65 percent of all mortgages in the second quarter.

http://news.yahoo.com/s/ap/20071206/ap_on_bi_ge/mortgage_crisis_60;_ylt=And28tZReMbDjxW5ai5ZDXyb.HQA