Unlike much of the Tucson Foothills market, which lately has shown some encouraging signs of life, at $2 mil + it is deadsville. Well, that is, except for the occasional fire sale.
And there’ve been just two such fire sales in the last six months.
And both closed in December and both were deeply discounted short sales. One went for $1,400,000 from a one-time high of $4,450,000. The other for $2,325,000, from an original list of $4,950,000. But that’s it, except of course for the 20 homes for sale at $2 mil +, more than a few of which have been at it for two or three or more years. How much longer can that go on.
And apparently we’re not alone in this high-end mess. According to Realtytrac since 2007 foreclosure activity for homes valued at more than $2 million jumped by 273%.
Meanwhile, the share of foreclosures on mid-range properties valued between $500,000 and $1 million fell by 21%
But there may still be time because according to the Wall Street Journal lenders are slower to foreclose on higher priced homes - For the Costliest Homes, Foreclosure Comes Slowly
But time for what I’m not sure.
There are several reasons why holders of large mortgages are able to stay in place longer. A key factor is that banks tend to keep larger mortgages on their books, while smaller mortgages are more likely to be bundled into securities and later resold to investors with backing from Fannie Mae and Freddie Mac. Fannie and Freddie, the government-controlled mortgage giants, have set strict foreclosure timelines and will fine mortgage servicers that are found to be needlessly delaying the foreclosure process.
Mortgage companies may also be more flexible with borrowers because they may have more assets and better prospects of recovering. "The banks have hope for the wealthy—of future employment, additional income or bonuses as the market comes back," says Genevieve Salvatore, a Connecticut real-estate lawyer who represents delinquent borrowers as part of her practice.
Economists say banks are also more reluctant to foreclose on high-end properties because they are expensive to maintain and take longer to sell.
What's more, wealthier borrowers tend to be more sophisticated at stalling foreclosure by hiring attorneys. "It's cheaper to pay a monthly retainer to a lawyer than a $20,000 mortgage payment on an underwater loan," says Christopher Fountain, a Greenwich, Conn., real-estate broker.
Private-equity investor Paul Parmar lives in a 40,000-square-foot mansion in Colts Neck, N.J. His estate boasts a putting green, two bowling lanes and a Bali-esque "beach" with Tiki huts and sand. He also has a $23.7 million mortgage with Deutsche Bank, which hasn't received a payment from Mr. Parmar in nearly three years.
Despite Deutsche Bank's efforts to remove him, Mr. Parmar has remained in his compound while fighting the bank in a protracted legal battle.
Mr. Parmar had fought a foreclosure ruling by a state Supreme Court judge in favor of Deutsche Bank, claiming in court papers that the bank improperly handled the foreclosure proceedings.
Mr. Parmar says he initially stopped making mortgage payments of more than $54,000 a month because of another, unrelated business dispute, which he says froze his assets and bank accounts. When the dispute was resolved last fall, he deposited into escrow the more than $2 million he says Deutsche Bank requested to cover his mortgage payments, taxes, fees and Deutsche Bank expenses, court filings show.
Mr. Parmar says his settlement with Deutsche Bank will be filed with the court within the next week. "I've agreed to pay each and every dollar they asked for," he says.
High-end defaults are much in the news lately – so while we’re at it here’s one last piece from CNNMoney.com
Meanwhile other expenses were also piling up, including the couple's mortgage payment, which was more than $7,000 a month. They had gone to their lender, CitiMortgage, to ask them to modify the mortgage on their home, which was then valued at $3 million. But the bank refused.
Eventually, the Buchanans just stopped paying their mortgage. John said he hoped it would get the bank's attention. It has been almost 30 months since they last made a payment, meaning the couple is more than $210,000 behind on their mortgage.