Our Newport Beach loan modification lawyers saw an article recently suggesting that the wealthy handle mortgage distress differently from the rest of society. According to a July 9 article from the New York Times, the wealthy are far more likely to stop paying their mortgages than working-class and middle-class homeowners. Using data compiled by real estate data company CoreLogic, the newspaper said more than one in seven mortgages of more than $1 million is delinquent, as compared to one in 12 mortgages below $1 million. The newspaper noted that this does not in itself prove anything, but suggested that wealthy people may default at a higher rate intentionally, because they view an underwater home as a bad investment.
The article also looked specifically at homes purchased as investments. Among those with mortgages of over $1 million, the delinquency rate is 23% -- nearly a quarter of all such homes. Those with mortgages under $1 million had a delinquency rate of about 10% -- higher than the rate for owner-occupied homes, but less than half of the rate for the more expensive investment homes. Here in California, the wealthy Bay Area community of Los Altos had five foreclosure auctions listed in the local weekly paper. Before the crash, one worker at that paper said, it was surprising to see even one foreclosure listing a month. Observers in the article suggested that the wealthy are more likely to see defaulting as a matter of cutting their losses from a bad investment, whereas less well-off people may see walking away as morally or civically bad. The economist also said the rich are more likely to have resources to fall back on when they walk away.
As Rancho Palos Verdes loan modification attorneys, we believe both of those interpretations are right. Getting rich does not necessarily require ruthlessness, as the economist said, but it certainly helps to have good sense when it comes to money. If you believe your million-dollar property will never be worth what you owe, it makes good business sense to abandon the investment and minimize your losses. This logic applies to less expensive homes as well, but as a law professor told the Times, the business sense of the wealthy may not be as affected by arguments that abandoning a home is irresponsible or shameful. However, it's also very much worth noting that the wealthy are far more likely to have somewhere else to live, or the means to find a home quickly, if they do walk away from their homes. Less wealthy people may be more likely to keep paying because they don't have those resources.
Howard Law PC represents homeowners of all incomes and backgrounds who are looking for a third option -- a loan modification. From the beginning of the mortgage crisis, we believed that banks serve their own best interests as well as those of clients when they make small changes that allow homeowners to keep paying. Unfortunately, bureaucracy and fear of losing profits has made this option very difficult for most homeowners to achieve. This is where our Laguna Niguel loan modification lawyers can help. We negotiate aggressively with lenders, using their own promises, documentation and the law to remind them of their financial and legal obligations. We want all of our clients to leave with a meaningful, sustainable loan workout that allows them to stay in their homes for the long term.
If you're seeking a loan modification but you're not getting anywhere on your own, you should call Howard Law to lean more about our services. To set up a free consultation, call us toll-free at 1-800-872-5925 or send us an email.