Rich more likely to walk from homes

A house sits atop of pile of money represents the costs of a home


Stacey Vanek-Smith: Wealthy Americans are more likely to walk away from their homes than those of more modest means. A report out this morning in the New York Times says well-heeled homeowners are dumping expensive properties they can no longer afford. Here to talk about this with us is our own Nancy Marshall Genzer. She joins us live from Washington D.C. Good morning, Nancy.

Nancy Marshall Genzer: Good morning, Stacey.

Vanek-Smith: So Nancy, lots of homeowners have stopped paying their mortgages. Where is this data coming from?

Nancy Marshall Genzer: Well, the Times analyzed data from CoreLogic. That's a firm that analyzes real estate trends. The data shows that more than one in seven homeowners with loans over a million dollars has missed at least three payments in a row. They're seriously delinquent. Only about one in 12 homeowners who owe less than a million dollars is seriously delinquent. That's basically the rest of us. Now Stacey, you may have heard out there in Los Angeles that California was hit very hard by the housing meltdown.

Vanek-Smith: I feel like I've heard something about that. Yeah.

Marshall Genzer: Yeah, something about that. So, some of these multimillion dollar houses we're talking about are in the most exclusive suburbs of places San Francisco.

Vanek-Smith: Do we have any idea why are the wealthy more likely to walk away from their homes than other people?

Marshall Genzer: Well, the Times reports that these homeowners just say, look, their houses are not a good investment, and they decided to walk away. Of course, their houses are more expensive than the average home. So, their mortgage payments could be close to $10,000 a month. Also, some of the delinquent mortgages are for second homes that may be used as an investment. It's a lot easier to walk away from a house if you're not living in it -- if you're renting it out or if it's a vacation home. And the Times also says that the wealthy are less susceptible to tactics used by the government and banks to shame them into paying their mortgage.

Vanek-Smith: Thank you, Nancy. Nancy Marshall Genzer in Washington.

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First, I do not understand why you deleted from the transcript and the podcast the interview with the banker who said that there is nothing that can be done about these folks walking away from their mortgages. I think Marketplace owes an explanation to its listeners.

Now, as I remember the full story many of those walking away from expensive homes that are underwater are fully able to pay their mortgages. They choose not to live up to their obligations because the home is a "bad investment" that they want to dump. I'm thinking that maybe it's time to bring back debtor prisons for people like that!

Correction: "Owning" million dollars houses doesn't make people rich unless the houses are completely paid off. When people bought million dollars houses w/ little or no money down, it doesn't make them "rich", it makes them mere speculators.

Credit doesn't equal wealth, just as having multiple credit cards doesn't make you wealthy.

This "report" was incredibly shallow for NPR. Little wonder that someone chose to delete both on the "Listen to this Story" and the "Text of Interview" the final question and ridiculous answer, which went something like this: "Is there anything that can be done to force these people to pay?" "No, there's not." WHAT???? Do you mean the creditor can not get a judgment against this "wealthy" debtor and execute on this judgment against this "wealthy" debtor's assets?? This demonstrates that the premise of your story is flawed. There is a big difference between having an expensive mortgage and being wealthy!

Does this mean that if I have an apartment building (I am not rich - it is only a 4-plex) and I am having problems. Tenants don't want to pay rent, drug problems, whatever. Then I can just walk away? I don't have a lawyer so I have always thought it would just come out of my regular paycheck (I told you I am not rich). It would be about break-even - taxes on sale vs lost equity less the headache of selling (if I could find a buyer). Just a thought!

"The wealthy are less susceptible to tactics used by the government and banks to shame them into paying their mortgage."

No wonder rich people walk around with their noses in the air, oozing smugness, and flaunting their entitlement, while the rest of us constantly feel like we've been put in thumbscrews.

I'm not surprised about these actions. If you are rich and have enough residual income why throw it away on an quickly depreciating asset like an investment property. They are cutting their losses too. Just remember folks this is future income that the banks and investors were/are depending on as well.

The wealthy also seem to avoid paying into the system. Their greed as only grown unchecked in the past decades.

The wealthy also seem to avoid paying into the system. Their greed as only grown unchecked in the past decades.

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