http://online.wsj.com/article/SB10001424052702304198004575172303998670976.html The rich and famous now have something in common with hundreds of thousands of middle and lower-class Americans: The bank is about to take their homes. Houses with loans of $5 million or more will likely see a sharp rise in foreclosures this year, according to a RealtyTrac study for The Wall Street Journal. In February... [more]
http://online.wsj.com/article/SB10001424052702304198004575172303998670976.html
The rich and famous now have something in common with hundreds of thousands of middle and lower-class Americans: The bank is about to take their homes.
Houses with loans of $5 million or more will likely see a sharp rise in foreclosures this year, according to a RealtyTrac study for The Wall Street Journal.
In February alone, 352 homes nationwide in this category were scheduled for foreclosure auction, the final step before a bank acquisition. That is the largest monthly number of these so-called notices of sale since the financial crisis began. By comparison, in all of 2009, there were 1,312 such notices.
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Gabe Palacio for The Wall Street Journal
Economists say the super-wealthy are among the last to lose their homes in a mortgage crisis because they usually have high savings, better access to credit and other means for staving off foreclosure. But many of them work in financial services and other industries hit especially hard by the crisis, and have seen their wealth shrink in the market crash.
Big borrowers are more likely to default than ordinary people, according to data from First American CoreLogic. Its loan database, reflecting more than 80% of the overall home-loan market, includes 1,700 loans with balances of $4 million or more. About 14.8% of those loans were 90 days or more overdue at the end of January, compared with 8.7% for all home loans tracked by First American. Sam Khater, a senior economist at First American, said the bigger borrowers may be more prone to stop making payments when they have lost all their home equity.
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Response by inonada
almost 16 years ago
Posts: 7952
Member since: Oct 2008
I like how the one guy stiffed the local hardware and pet stores. What an ass.
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Response by aboutready
almost 16 years ago
Posts: 16354
Member since: Oct 2007
rich people aren't just like the poor. their credit ratings do not matter, they have cash. of course they're more likely to default if it makes economic sense. just like their corporate brethern, the trumps, TS's, etc., it doesn't matter if they default if they're rich.
it's the poor and lower middle class who generally try not to default. of course they often do not succeed. some poor people are never able to save enough to pay for bankruptcy filing fees, while most others of course are able to come up with the cash. irony.
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Response by jasieg16
almost 16 years ago
Posts: 123
Member since: Oct 2009
Part of what AR is saying is true, however a bigger problem in the country over the last few years is that people have been spending based on cheap financing and flexible credit. Bottom line is that these people actually could not afford what they were buying and when that "fictional" money from credit and financing vanished, reality quickly set in. This is not an issue that only the poor deal with. Look at the people that invested with madoff. They put in X and in no time that became 10X. the money they had was not real and they now face the same issues as the poor who over extended themselves as well.
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Response by Riversider
almost 16 years ago
Posts: 13572
Member since: Apr 2009
Anyone who took out a stated income mortgage for a property they could not afford and knowingly lied on their application for all practical purposes intended to default. A great deal of subprime lending was done this way. These were not rich people. The poor are no more noble than the rich.
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Response by Riversider
almost 16 years ago
Posts: 13572
Member since: Apr 2009
Disagree jasieg. This is clearly an overly romantic view of the poor.
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Response by jasieg16
almost 16 years ago
Posts: 123
Member since: Oct 2009
Also how can you compare Trump and TS to any of this. Trump doesnt have money. He gets paid a few million for the use of his name as a brand. The speyers run a partnership where they are in control of a capital fund. They dont invest soley their own money as someone buying a home would do. Trump has lost it all several times but as a PR whiz he has managed to keep himself well positioned.
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Response by jasieg16
almost 16 years ago
Posts: 123
Member since: Oct 2009
Agreed that it is overly romantic... i am trying to sum up the basic basic underlying principal of the entire "crisis". Subprime is a major part of that, so is predatory lending, and people that never thought we would ever come down from the high.
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Response by aboutready
almost 16 years ago
Posts: 16354
Member since: Oct 2007
RS doesn't believe predatory lending existed. i believe he had some pithy phrase along the lines you can't fool an honest person, or some such.
i'm saying there are little to no implications when those in power, whether it's through corporate structure or wealth, default. the nexus was strategic default. those who are insulated from consequences have little difficulty looking at a deal from a strictly financial perspective. its the same concept. returning the keys and walking away with few regrets. oops, that didn't work. oh well. and trump hasn't always had this business model, you know. it evolved, perhaps as a result of the earlier bankruptcies.
the implications are far greater for those with fewer resources.
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Response by jasieg16
almost 16 years ago
Posts: 123
Member since: Oct 2009
Trumps new model absolutely evolved from his business troubles. Primarily he lost the respect of the re community as being financially viable but he was able to maintain the trump brand and grew that brand through excellent PR and marketing... even if we all get sick from his press.
When you hand the keys over to a lender you lose a lot. TS did not just hand in the keys they have lost thre respect of the re community. They have had problems across their portfolio and now they are losing partners, investors and institutional lenders. They may not be losing their homes, or the shirts off their backs but they will find it hard to continue business as usual.
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Response by somewhereelse
almost 16 years ago
Posts: 7435
Member since: Oct 2009
Trump is a HORRIBLE investor who has gone bust a couple times AND has had to be bailed out by his dad a couple other times. Trumpnation covers this. Trump sued the author and lost.
He has made nowhere near what he claims, his net worth is probably less than most of the goldman partners, and his "skill" was making large leveraged bets that looked good for a while and then busted him.
He has probably made more from his show (and essentially his lying) than his building.
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Response by The_President
almost 16 years ago
Posts: 2412
Member since: Jun 2009
I love how the conservative media like the WSJ constantly tries to say that the poor and rich are exactly alike. Right, sure they are. When a rich person goes into foreclsoure, they are not going to end up in a crummy rental apt. or in their mother's absement. This Murdoch Street Journal article is a load of BS.
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Response by aboutready
almost 16 years ago
Posts: 16354
Member since: Oct 2007
jasieg, i beg to disagree. TS had a setback. what about Morgan Stanley walking away from numerous real estate portfolios, i know of at least two, SF and DC? by the time this is finished so many banks and developers will have been shown to have made horrible decisions it will hardly leave a blemish. what about the Miami developers who continued building elsewhere after it was apparent they were part of a huge disaster, and received construction loans to do so?
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Response by somewhereelse
almost 16 years ago
Posts: 7435
Member since: Oct 2009
Difference is, MS has a ton of different business.... TS, this is what they do, and the botched it.
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Response by aboutready
almost 16 years ago
Posts: 16354
Member since: Oct 2007
i agree, swe, it was notable and spectacular. but i still think it will have little to no impact on their business going forward, except that they may actually be more cautious in the future. some of the other developers, not so much. i think it was durst who said he felt that the CRE industry hadn't learned a thing from the past few years.
my point is that the industry will take the greenspan view of things, who could have known? we did the best we could, you couldn't have expected anything more, we didn't have a crystal ball. and while i think that's BS, i think it will just be viewed as part of the cycle, the down part, and everyone will look forward expecting the next upswing.
The opening bid for the actor’s 12,000-square-foot home was $10.4 million, but there are $18 million worth of loans on the property.
The Tudor mansion boasts six bedrooms, a central tower, home theater and an Olympic-sized pool. The house reverted to the foreclosing lender at Wednesday’s auction in Pomona.
Even though he’s one of Hollywood’s highest-paid stars, Cage has money troubles. He owes millions in unpaid taxes and in January his foreclosed home in Las Vegas sold for nearly $5 million.
I like how the one guy stiffed the local hardware and pet stores. What an ass.
rich people aren't just like the poor. their credit ratings do not matter, they have cash. of course they're more likely to default if it makes economic sense. just like their corporate brethern, the trumps, TS's, etc., it doesn't matter if they default if they're rich.
it's the poor and lower middle class who generally try not to default. of course they often do not succeed. some poor people are never able to save enough to pay for bankruptcy filing fees, while most others of course are able to come up with the cash. irony.
Part of what AR is saying is true, however a bigger problem in the country over the last few years is that people have been spending based on cheap financing and flexible credit. Bottom line is that these people actually could not afford what they were buying and when that "fictional" money from credit and financing vanished, reality quickly set in. This is not an issue that only the poor deal with. Look at the people that invested with madoff. They put in X and in no time that became 10X. the money they had was not real and they now face the same issues as the poor who over extended themselves as well.
Anyone who took out a stated income mortgage for a property they could not afford and knowingly lied on their application for all practical purposes intended to default. A great deal of subprime lending was done this way. These were not rich people. The poor are no more noble than the rich.
Disagree jasieg. This is clearly an overly romantic view of the poor.
Also how can you compare Trump and TS to any of this. Trump doesnt have money. He gets paid a few million for the use of his name as a brand. The speyers run a partnership where they are in control of a capital fund. They dont invest soley their own money as someone buying a home would do. Trump has lost it all several times but as a PR whiz he has managed to keep himself well positioned.
Agreed that it is overly romantic... i am trying to sum up the basic basic underlying principal of the entire "crisis". Subprime is a major part of that, so is predatory lending, and people that never thought we would ever come down from the high.
RS doesn't believe predatory lending existed. i believe he had some pithy phrase along the lines you can't fool an honest person, or some such.
i'm saying there are little to no implications when those in power, whether it's through corporate structure or wealth, default. the nexus was strategic default. those who are insulated from consequences have little difficulty looking at a deal from a strictly financial perspective. its the same concept. returning the keys and walking away with few regrets. oops, that didn't work. oh well. and trump hasn't always had this business model, you know. it evolved, perhaps as a result of the earlier bankruptcies.
the implications are far greater for those with fewer resources.
Trumps new model absolutely evolved from his business troubles. Primarily he lost the respect of the re community as being financially viable but he was able to maintain the trump brand and grew that brand through excellent PR and marketing... even if we all get sick from his press.
When you hand the keys over to a lender you lose a lot. TS did not just hand in the keys they have lost thre respect of the re community. They have had problems across their portfolio and now they are losing partners, investors and institutional lenders. They may not be losing their homes, or the shirts off their backs but they will find it hard to continue business as usual.
Trump is a HORRIBLE investor who has gone bust a couple times AND has had to be bailed out by his dad a couple other times. Trumpnation covers this. Trump sued the author and lost.
He has made nowhere near what he claims, his net worth is probably less than most of the goldman partners, and his "skill" was making large leveraged bets that looked good for a while and then busted him.
He has probably made more from his show (and essentially his lying) than his building.
I love how the conservative media like the WSJ constantly tries to say that the poor and rich are exactly alike. Right, sure they are. When a rich person goes into foreclsoure, they are not going to end up in a crummy rental apt. or in their mother's absement. This Murdoch Street Journal article is a load of BS.
jasieg, i beg to disagree. TS had a setback. what about Morgan Stanley walking away from numerous real estate portfolios, i know of at least two, SF and DC? by the time this is finished so many banks and developers will have been shown to have made horrible decisions it will hardly leave a blemish. what about the Miami developers who continued building elsewhere after it was apparent they were part of a huge disaster, and received construction loans to do so?
Difference is, MS has a ton of different business.... TS, this is what they do, and the botched it.
i agree, swe, it was notable and spectacular. but i still think it will have little to no impact on their business going forward, except that they may actually be more cautious in the future. some of the other developers, not so much. i think it was durst who said he felt that the CRE industry hadn't learned a thing from the past few years.
my point is that the industry will take the greenspan view of things, who could have known? we did the best we could, you couldn't have expected anything more, we didn't have a crystal ball. and while i think that's BS, i think it will just be viewed as part of the cycle, the down part, and everyone will look forward expecting the next upswing.
http://www.nypost.com/p/pagesix/no_one_buys_nicolas_cage_mansion_jxD5scIaTNwXbPE8myLSZP
The opening bid for the actor’s 12,000-square-foot home was $10.4 million, but there are $18 million worth of loans on the property.
The Tudor mansion boasts six bedrooms, a central tower, home theater and an Olympic-sized pool. The house reverted to the foreclosing lender at Wednesday’s auction in Pomona.
Even though he’s one of Hollywood’s highest-paid stars, Cage has money troubles. He owes millions in unpaid taxes and in January his foreclosed home in Las Vegas sold for nearly $5 million.