I got this report from an attorney who is doing work in one of the top five foreclosure states. I’m relying this account in a somewhat sanitized form; he provided far more in the way of specifics.
One of his colleagues has a monthly mortgage payment considerably above $20,000 a month. He has not made a single payment in over 18 months. He has also not received a foreclosure notice or even as much as a call from his servicer.
He knows of 20 people personally in his community who have mortgages of over $20,000 a month who have not made a payment in over a year. As with his case, there has not been a peep from the bank about the failure to pay. Some are nevertheless freaked out, concerned that the sheriff will show up any day, and have moved out.
The only theory my contact could come up with is that the high end appliances in these homes would make them particularly attractive targets for stripping, and the banks figure it’s cheaper to keep the nominal homeowner in place rather than pay for security. Another possibility is that the market for $5 million and over homes in this area is so thin (as in non-existant) that they are afraid to take over and put any homes on the market out of concern for revealing where prices are now.
Needless to say, this anecdote illustrates the two tier system we have in the US, of one set of practices for the very well off and another for the great unwashed.
Two questions for readers:
1. Do you see evidence of bank reluctance to foreclose in neighborhoods with very high end homes? Is this example isolated, or part of a broader phenomenon?
2. If so, what do you think is driving this behavior?