Foreclosure Beverly Hills Style
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Foreclosure Beverly Hills Style
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March 8, 2011 (Chris Moore)
mortgage-barbie-image
They come from all walks of life. From the guy next door, to celebrities, to even large prominent companies, strategic default is a growing option for more and more borrowers to take. The exact amount of strategic foreclosures is unknown but a recent study by the Federal Reserve Board showed that half of the home owners who walked away from their homes owed twice as much as it was worth. Throwing morals out the window, strategic default for some essentially becomes a business decision.

Strategic defaults are home owners whose home value has dropped so drastically the borrower decides to stop paying the mortgage and walk away from the property, even though they can afford to make the payments. With the current long timelines from the point of default until the point of foreclosure, many borrowers can stay in their homes for up to two years, without having to pay a cent!

And you think it’s just the working man? Oh no. In fact, delinquency rates with loans over $1 million are higher than rates for the average homeowner…one in seven compared to one in twelve. You may drive through Beverly Hills and see all those sleek European luxury cars, but behind those iron gates there are many who have leveraged their balance sheet to the hilt.

The local CBS news station chronicled the trials of a Los Angeles area resident who had purchased an ocean view townhome in 2006 for $1.385 million and after watching the value steadily drop to “less than $800,000, maybe less,” stopped paying on his mortgage.

“I haven’t made a payment in two years,” he says. “It was business decision. It was an easy decision. I have a property worth six or 700,000 less than when I bought it. I was making payments of 10,000 a month.”

“People like myself, business people, are thinking it is silly to throw good money after bad,” he added. “The loss is not mine. The loss is the banks.” Well not quite, it’s the taxpayer who pays in the end.

As of February 1st, the Multiple Listing Service (MLS) officially listed only four foreclosed homes for sale in the Beverly Hills area, yet there were 149 homes with default notices of which 107 had estimated mortgage balances of over $1 million. Almost makes you want to line up at the courthouse to get in on the great deals.

But it’s not just the rich Beverly Hills players who have been hit hard by the housing crisis, even Morgan Stanley walked away last year from a $1.5 billion mortgage on five buildings in San Francisco despite record-breaking profits in 2009. I wonder how big the bonus was for the guy who masterminded that purchase.

The stigma attached to strategic defaults always weakens during housing downturns. We saw it during the last housing downturn, but are seeing it far more this time around as the housing crisis is the most severe in 80 years.

Luigi Zingales, an economist and professor at the University of Chicago’s Booth School of Business says, “Once you think it’s socially acceptable, it becomes easier to do.”

Such is the life of the rich and maybe not so famous.

Next…foreclosures of the Housewives of Orange County. Let’s not go there.

Tags: strategic defaults, foreclosure, mortgage borrowers, home values, housing crisis

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NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.
Helpful Tools
Mortgage
Calculator

Estimate your monthly mortgage payment
Auto Loan
Calculator

Determine how much car you can afford before buying
Learn About
Mortgage Loans

Learn about the different types of home loans
15 Year vs 30 Year
Loan Comparison

Compare 15 year and 30 year mortgage loans
Todays Mortgage
Rates

See today's mortgage rates. Shop, compare and save.

March 8, 2011 (Chris Moore)
mortgage-barbie-image
They come from all walks of life. From the guy next door, to celebrities, to even large prominent companies, strategic default is a growing option for more and more borrowers to take. The exact amount of strategic foreclosures is unknown but a recent study by the Federal Reserve Board showed that half of the home owners who walked away from their homes owed twice as much as it was worth. Throwing morals out the window, strategic default for some essentially becomes a business decision.

Strategic defaults are home owners whose home value has dropped so drastically the borrower decides to stop paying the mortgage and walk away from the property, even though they can afford to make the payments. With the current long timelines from the point of default until the point of foreclosure, many borrowers can stay in their homes for up to two years, without having to pay a cent!

And you think it’s just the working man? Oh no. In fact, delinquency rates with loans over $1 million are higher than rates for the average homeowner…one in seven compared to one in twelve. You may drive through Beverly Hills and see all those sleek European luxury cars, but behind those iron gates there are many who have leveraged their balance sheet to the hilt.

The local CBS news station chronicled the trials of a Los Angeles area resident who had purchased an ocean view townhome in 2006 for $1.385 million and after watching the value steadily drop to “less than $800,000, maybe less,” stopped paying on his mortgage.

“I haven’t made a payment in two years,” he says. “It was business decision. It was an easy decision. I have a property worth six or 700,000 less than when I bought it. I was making payments of 10,000 a month.”

“People like myself, business people, are thinking it is silly to throw good money after bad,” he added. “The loss is not mine. The loss is the banks.” Well not quite, it’s the taxpayer who pays in the end.

As of February 1st, the Multiple Listing Service (MLS) officially listed only four foreclosed homes for sale in the Beverly Hills area, yet there were 149 homes with default notices of which 107 had estimated mortgage balances of over $1 million. Almost makes you want to line up at the courthouse to get in on the great deals.

But it’s not just the rich Beverly Hills players who have been hit hard by the housing crisis, even Morgan Stanley walked away last year from a $1.5 billion mortgage on five buildings in San Francisco despite record-breaking profits in 2009. I wonder how big the bonus was for the guy who masterminded that purchase.

The stigma attached to strategic defaults always weakens during housing downturns. We saw it during the last housing downturn, but are seeing it far more this time around as the housing crisis is the most severe in 80 years.

Luigi Zingales, an economist and professor at the University of Chicago’s Booth School of Business says, “Once you think it’s socially acceptable, it becomes easier to do.”

Such is the life of the rich and maybe not so famous.

Next…foreclosures of the Housewives of Orange County. Let’s not go there.

Tags: strategic defaults, foreclosure, mortgage borrowers, home values, housing crisis

FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateNetwork and the offers you have received, you've found the right product and the best rate.
HOW LOANRATENETWORK
LOAN CENTER WORKS
ADVANTAGES OF USING
LOANRATENETWORK
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.
Helpful Tools

March 8, 2011 (Chris Moore)
mortgage-barbie-image
They come from all walks of life. From the guy next door, to celebrities, to even large prominent companies, strategic default is a growing option for more and more borrowers to take. The exact amount of strategic foreclosures is unknown but a recent study by the Federal Reserve Board showed that half of the home owners who walked away from their homes owed twice as much as it was worth. Throwing morals out the window, strategic default for some essentially becomes a business decision.

Strategic defaults are home owners whose home value has dropped so drastically the borrower decides to stop paying the mortgage and walk away from the property, even though they can afford to make the payments. With the current long timelines from the point of default until the point of foreclosure, many borrowers can stay in their homes for up to two years, without having to pay a cent!

And you think it’s just the working man? Oh no. In fact, delinquency rates with loans over $1 million are higher than rates for the average homeowner…one in seven compared to one in twelve. You may drive through Beverly Hills and see all those sleek European luxury cars, but behind those iron gates there are many who have leveraged their balance sheet to the hilt.

The local CBS news station chronicled the trials of a Los Angeles area resident who had purchased an ocean view townhome in 2006 for $1.385 million and after watching the value steadily drop to “less than $800,000, maybe less,” stopped paying on his mortgage.

“I haven’t made a payment in two years,” he says. “It was business decision. It was an easy decision. I have a property worth six or 700,000 less than when I bought it. I was making payments of 10,000 a month.”

“People like myself, business people, are thinking it is silly to throw good money after bad,” he added. “The loss is not mine. The loss is the banks.” Well not quite, it’s the taxpayer who pays in the end.

As of February 1st, the Multiple Listing Service (MLS) officially listed only four foreclosed homes for sale in the Beverly Hills area, yet there were 149 homes with default notices of which 107 had estimated mortgage balances of over $1 million. Almost makes you want to line up at the courthouse to get in on the great deals.

But it’s not just the rich Beverly Hills players who have been hit hard by the housing crisis, even Morgan Stanley walked away last year from a $1.5 billion mortgage on five buildings in San Francisco despite record-breaking profits in 2009. I wonder how big the bonus was for the guy who masterminded that purchase.

The stigma attached to strategic defaults always weakens during housing downturns. We saw it during the last housing downturn, but are seeing it far more this time around as the housing crisis is the most severe in 80 years.

Luigi Zingales, an economist and professor at the University of Chicago’s Booth School of Business says, “Once you think it’s socially acceptable, it becomes easier to do.”

Such is the life of the rich and maybe not so famous.

Next…foreclosures of the Housewives of Orange County. Let’s not go there.

Tags: strategic defaults, foreclosure, mortgage borrowers, home values, housing crisis

HOW LOANRATENETWORK
LOAN CENTER WORKS
FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateNetwork and the offers you have received, you've found the right product and the best rate.
ADVANTAGES OF USING
LOANRATENETWORK
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT
CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.