Million Dollar Home Defaults Snowball
As prices fall from foreclosed properties, more wealthy Bay Area families will end up underwater
By JACKSON WEST
Updated 2:15 PM PST, Mon, Nov 9, 2009
The tiny community of Saratoga has experienced more than double the rate of mortagages defaulting in the first three quarters of this year over the first three quarters of 2008, according to the San Francisco Chronicle's research.
It's estimated that half those defaults will go into foreclosure, triggering a snowball effect -- as values drop and properties are taken over by banks, prices will fall further, turning more mortages upside-down where the loan balance exceeds the resale value.
While not as dire as the situation in places like outer East Bay suburbs -- where 90 out of 1000 mortages are in default as opposed to 8 out of 1000 in wealthier zip codes -- these failures are among mortgages considered much less risky than the sub-prime loans extended to lower-income borrowers.
And it's unlikely there will be much political support for helping these families as the federal government has done for the lower end of the market.
Jackson West hopes this proves the death knell to McMansion-centric suburban development.
Copyright NBC Local Media
First Published: Nov 9, 2009 1:35 PM PST
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