More than one in seven home loans in excess of $1 million are seriously delinquent, according to data compiled for the NY Times by real estate analytics firm CoreLogic.
At the same time, only about one in 12 mortgages below the $1 million-mark are behind on payments, which CoreLogic attributes to the rich being “more ruthless.”
Not just ruthless, but strategically ruthless.
Many of the defaults are suspected to be strategic, meaning borrowers have decided to walk away instead of continuing to make mortgage payments, even though they are more than able to do so.
CoreLogic has seen the trend across all property types, including primary residences, vacation homes, and investment properties.
And despite likely having more resources at hand to repay their mortgages, the rich are falling into default at a higher clip.
For example, the delinquency rate on investment properties where the original mortgage exceeded $1 million is now a staggering 23 percent, while just about 10 percent for cheaper investment homes.
Looking back a few years, smaller loans were much more likely to be in serious default, but the trend quickly reversed in the past couple years.
Recently, rapper Chamillionaire even admitted to strategically defaulting on his 7,583 square foot mansion in Houston, Texas.
The rich may be more willing to walk away because there is less concern about the credit scoring impact of a foreclosure, as they can purchase another house with cash, or simply shed one of their many properties.