People who bought some of the most expensive homes in America now are far more likely to be behind on their mortgages than are ordinary Joes.
We got this interesting data from First American CoreLogic, whose loan database covers more than 80% of the overall home-loan market. That database includes 1,700 mortgage 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.
First American CoreLogic
Percentage of home loans 90 days or more delinquent. Blue: greater than $1 m Red: less than $1m
What’s going on here? Sam Khater, a senior economist at First American, said his theory is that the borrowers with huge loans may be more inclined than people of lesser means to decide it isn’t worth paying the lender any more once the value of the home crashes far below the loan balance.
Another possibility is that many of those borrowers were high rollers on Wall Street who have lost much or all of their incomes and no longer can keep up their Gatsby-esque lifestyles.