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November 24, 2014

Rich Stay Put Longer When in Foreclosure, Study Says

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Rich Stay Put Longer When in Foreclosure, Study Says

How pricey your home is may influence how quickly you're evicted from a home in foreclosure, finds a new study.

An analysis by The Wall Street Journal finds that banks take longer to evict once-wealthy home owners who live in expensive homes but stop making their payments than defaulting home owners who live in more modest homes.

"Nationally, borrowers with loans of at least $1 million were in default for an average 792 days last year before banks repossessed their homes," the study notes. On the other hand, home owners with mortgages under $250,000 don't tend to get to stay as long, being evicted six months -- or about 180 days -- earlier than that.  

The states where the disparity was found the most in:

  • Kentucky
  • Missouri
  • Indiana
  • Utah
  • Michigan 

The Wall Street Journal study suggests that the difference in the eviction rates may be explained for a number of reasons, such as that banks tend to hold larger mortgages on their books while tending to bundle small loans and resell them. Also, researchers suggest that lenders may view home owners living in expensive homes as more likely to recover financially. Plus, expensive homes can take longer to sell and are more costly for banks to maintain, so banks may be more hesitant to take ownership of them. 

Source: "Foreclosures Take Longer for the Rich, Report Says," MSNBC.com (Feb. 28, 2012)

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