The Wealthy Strategic Defaulters
We have some first-class stuff today. Reading the New York Times this morning, we noticed that we are hearing the expression “strategic default” lots more recently. Strategic default is basically letting your property go into foreclosure. The home owner decides not to make payments because the worth of your property has gone down. The house owner might also not be making payments because ultimately they will not be able to make payments. So they are only speeding up the foreseeable.
Core Logic came up with some remarkable information on what the wealthy are doing with their cash and what some of the middle class are doing with their money. More than one in seven house owners with million dollar loans are critically deliquent. Below a million dollars, the statistics are just one in twelve homes. Core Logic chief economists believe that the rich are a little more ruthless. Fannie Mae and Freddie Mac are begging home owners to keep making their mortgage payments, but the rich are not obliged to do so.
Investment houses with an initial mortgage over a million dollars, have a deliquency ratio is 23%. For cheaper investments the deliquency rate is around 10%. The rich and successful are less vulnerable to the dishonor and fear mongering used by the gov’t and mortage lending business to keep underwater house owners from acting in their financial best interest.
It is interesting that the editorial says bad stuff about the affluent making this business decision. Many lenders are addressing strategic default. We do not make a stand on either side of it. However, the affluent are making a good business choice. If the middle class was a little more economically well-informed, maybe they would make the identical decision.
Get more help from short sale Realtors, Josh and Sarah, at Short Sale Shift presented by the Short Sale Specialists of Minnesota