The Mortgage Bankers Association released statistics showing a significant, 28 percent decrease in the rate of foreclosures for most homes in 2011. All, that is, except homes with a value exceeding $1 million.
It has been five years since foreclosure rates on expensive properties have been going up. According to figures from RealtyTrac, there has been a 115 percent increase in the number of foreclosures on these types of homes since 2007.
In addition, the number of foreclosures on homes worth over two million dollars went up 273 percent. This is in contrast to the 21 percent drop in foreclosures on properties worth $500,000 to $1 million.
Analysts believe that this trend is due to the number of wealthy individuals who are able to delay foreclosure proceedings by hiring lawyers. As most lawyers cost less than the normal monthly mortgage payment on expensive homes, this makes perfect sense for the owners of these homes.
Additionally, banks usually take longer to resell expensive homes due to the costs. There have also been several homeowners who decide to default on their mortgage payments due to their homes being valued less than the outstanding amount on the mortgage. All these reasons are believed to be major factors as to why million-dollar homes are uncharacteristically being foreclosed more often, and take more time to repossess.
In relation to the above, foreclosures usually take longer to complete for more well-to-do homeowners as banks tend to be more patient with them. The Wall Street Journal reported that last year, million-dollar borrowers were delinquent longer (792 days) than borrowers of loans less than $250,000 (611 days) before their homes were repossessed.