Wednesday, May 06, 2009
Subprime is down; now million-dollar mortgages turn sour too
Bloomberg: Rich Americans Default on Luxury Homes Like Subprime Victims
The number of U.S. "jumbo" mortgages entering the foreclosure process jumped 127% during the first 10 weeks of this year from the same period of 2008. Chuck Dayton bought a $950,000 house near the ocean in Newport Beach, California, in 2004, with a 25% deposit. He was making $500,000 a year with his plasterboard company. He refinanced in February 2007 with a $1 million loan and also took out two private mortgages to help pay business expenses. Now he owes $46,584 in delinquent payments and penalties. The foreclosure process typically takes about a year. That means jumbo-loan defaults will increase over the next year. [Remember, the US housing market is 12-18 months ahead of the UK. Also what effect will this have on banks?]
Posted by drewster @ 05:51 PM (542 views) Add Comment
3 Comments
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1. japanese uncle said...
Anyone daft enough to finance his business via equity release is first of all not qualified to run any business at all.
2. crunchy said...
Subprimed for the slimed. Primed for the once dimed.
Epic overleveraging of major (bailout) institutions had nothing to do with this of course.
3. mander said...
“Just like homeowners in smaller homes, these homeowners anticipated being able to refinance mortgages to continue making payments and at a future date sell for a gain and put it toward their next home.
Sounds crazy transforming all homeowners in speculators...