Agreed – however, the Sheriff doesn’t just evict one day out of the blue: folks will be papered to death, they hopefulle now how to read, and the baliffs don’t spontaneously bust the lock and toss the flat screen into the yard without substantial forewarning, in every state. It’s pretty clear when stuff should be abandoned or U-Hauled away, people still confuse foreclosure with eviction, I would encourage no one to freak out about any of this horseshit, but fight it if they want to stay.
To boot this sector is only able to get loans on the private market (being above the Fannie and Freddie limits)
It is really very simple – the market for homes in the high-end range is literally dead (unless the property is particularly spectacular and has a premium location.)
A foreclosure sale would reveal true values and cause every comp in the neighborhood to drop. We all know that the more underwater the owner is, the more likely they are to walk away – this is even more true on high end properties.
If it were to be revealed that values of formerly 5 million dollar homes was now more like 3.5 million, that would cause a stampede of owners walking away and stopping payments. One house with a 5 million dollar mortgage will do the same financial damage of 16 houses at 300k.
You are also talking about owners in the same social class as executive bankers. They don’t want to see their own home values erode any more than joe six pack.
The private mortgage market is definitely on life support so that may be one of the reasons little turnover is seen in these properties, no one will lend on it.
I like your post. You mentioned premium locations and very special properties. I think there are few locations that are solid and established enough that they will experience a milder downtown than others. I might mis-understand your idea of very special properties, but I do know the only house ever built by one of the most highly regarded architects in the world sold recently for about half of the original asking price. A large, late 18th century estate I know of has languished and probably won’t sell unless they really cut the price.
I’d imagine that banks are most reluctant to foreclose on high-end homes in areas where majority of as the sales have been very recent. Not only would the home values fall fast (I’d imagine the formerly $5million places would fall to well below $3.5mil.), but the political dynamic would change very quickly.
This would destroy banks, servicers and everyone who had invested in those MBS products
I also wonder if this is a conscious or sub-conscious attempt by the powers in charge (but not necessarily the PTB) to keep the consumer economy moving a little bit. Regulators allow extend and pretend, balance sheets aren’t hit, and the extra ‘savings’ of mortgage payments allow for some shopping at the mall to prop up the economy artificially.
It is interesting to see all of the comments about “rich” people getting the best deal in foreclosure. in my book, if you are truly “rich”, then you are not in foreclosure – you probably paid cash for the house, or took a very low rate, floating HELOC and played the spread with higher paying investments. If you did take a mortgage, you paid it because you can afford it, and you would NOT go through a strategic foreclosure because of the impact on the mutual trust necessary to do business in any community.