Marketplace is community-funded public service journalism. Give in any amount that works for you – what matters is that you give today.
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.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.