A growing number of luxury homes are turning up on foreclosure listings, as wealthy owners who've seen their home values drop significantly lower than their jumbo mortgages simply walk away. See a slideshow of some of the most expensive homes in foreclosure.
A growing number of luxury homes are turning up on foreclosure listings, as wealthy owners who’ve seen their home values drop significantly lower than their jumbo mortgages simply walk away.
Nationally, one in seven homeowners with loans of more than $1 million is seriously delinquent on mortgage payments, according to foreclosure information website ForeclosureListings.com. The delinquency ratio is closer to 1 in 12 for homeowners with mortgages of $1 million or less.
The increasing number of luxury homes going into default is in part due to wealthier homeowners opting for a “strategic default” and walking away from what turned out to be a bad investment, ForeclosureListings said in a recent statement.
In many cases, homeowners continue to reside in their luxury homes long after the mortgages go into default. “Considering that banks are very slow to seize high-end homes (expensive houses cost banks a lot of money to maintain and they are very difficult to sell during a slow housing market), and that abandoned homes lower neighborhood property values of surrounding houses, it is not in the best interest of banks to seize expensive homes facing foreclosure,” according to ForeclosureListings. (Indeed, one bank is so overwhelmed with abandoned, foreclosed homes that it’s decided to give some away.)
While some of the most-expensive homes in foreclosure are located in regions that were the real-estate hot spots during the housing boom -- Arizona, Florida, California — million-dollar foreclosures can be found throughout the U.S.
Here’s a slideshow of the five of the most notable, and expensive, dream home foreclosures.