Homeowners with mortgages of more than $1m are defaulting at almost twice the US rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.
'The rich aren’t as rich as they used to be,' said Alex Rodriguez, a Miami real estate agent with JM Group USA, whose listings include a $2.9m property marketed as a short sale because the price is less than the mortgage, leaving the bank with a loss. 'People have reached the point where they can’t afford the carrying expenses of a $2m home.'
Payments on about 12% of mortgages exceeding $1m were 90 days or more overdue in September, compared with 6.3% on loans less than $250,000 and 7.4% on all US mortgages, according to data from First American CoreLogic, a research firm. The rate for mortgages above $1m was 4.7% a year earlier.