Bloomberg reports:

Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.

Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a Santa Ana, California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier.

Luxury-Home Owners in U.S. Use ‘Short Sales’ as Defaults Rise [Bloomberg]

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Comments from “Plugged-In” Readers

  1. Posted by EBGuy

    For example, 350 Jackson #303 was bought for $1.696million in 2006 with a $1,271,250 variable mortgage. Flash forward to Dec. 30th of this year when it will be offered on the courthouse steps for $1,486,689. The owners hail from Crystal Bay, Nevada and appear to be bailing on their ‘investment’.

  2. Posted by mickel

    why won’t they just sell it if the loan is $1.27 and it is going for $1.47 at the courthouse. Even with realtor fees, they would be ahead

  3. Posted by anonm

    @mickel
    The loan principal may now exceed $1.271m if they have only been making minimum payments.

  4. Posted by joh

    I wonder what kind of effect (if any) this will have in the sub-million dollar homes. I’m sure there’s downward pressure, but I wonder how far down…
    For example, will the homes in the $500K-600K price ranges be affected?

  5. Posted by anon

    1522 Lake St–completely stripped…
    [Editor’s Note: Plug in – and save your comments – for our feature on 1522 Lake tomorrow.]

  6. Posted by anonn

    You shouldn’t run with Lake yet. Wait a week or so and you’ll know how much they got it for out of foreclosure. Otherwise it’ll be the usual unstable platform for a bunch of weisenheimers to guess loudly.
    [Editor’s Note: Ah yes, those good old weisenheimers (incorrectly) guessing loudly.]

  7. Posted by corntrollio

    Editor, have you ever considered 1112 Lombard? It’s right before the crooked part, so the driveway and surrounding streets are constantly blocked by tourists. Apparently, the owner bought this place for $3.06M about a year ago and tried to flip it in June for $4.998M. The current price is $3.85M. The seller claims to be motivated, but I don’t believe it. There’s no claim on the listing of renovations.
    http://www.redfin.com/CA/San-Francisco/1112-Lombard-St-94109/home/1321829

  8. Posted by corntrollio

    (Also, sort of oddly, the mailing address for 1112 Lombard is 1710 Golden Gate, which recently sold. http://www.redfin.com/CA/San-Francisco/1710-Golden-Gate-Ave-94115/home/592692)

  9. Posted by justme

    For example, will the homes in the $500K-600K price ranges be affected?

    Both of them?

  10. Posted by The Milkshake of Despair

    There are 184 SF homes in the $500K-600K range. Granted, most in D10 and other districts that are off the radar for most readers here.

  11. Posted by sparky-b

    If you take out D10 and in contract, there are 26.

  12. Posted by anonn

    If you take out D10 and in contract, there are 26
    Take out the worse parts of D3 and there are 10 in the entire city. I’ve seen five of those, four Bernal and one probably unsaleable Mission house, with a litany of challenges each. That leaves four outer Sunset fixers, and one tiny Sunnyside house. That’s your 500 to 600K San Francisco SFR market.

  13. Posted by JimBobJones

    Out of curiosity, what are the worse parts of D3?

  14. Posted by anonn

    Ingleside and Oceanview

  15. Posted by joh

    I was actually including condos as well as houses, which there seem to be more than 10 of in D6, D8, and D9.

  16. Posted by corntrollio

    Just to give a quick update on 1112 Lombard, since I mentioned it above. It was taken off-market on Tuesday. The last price on it was $3.675M as of Dec 18. The latest owner only had one permit pulled — $30K for kitchen and one bathroom (including compliance with Title 24). It must be pretty close to an apple, as the owner wasn’t claiming renovations on the listing (maybe just refreshing to their own taste).

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