House Of Really, Really Nice Cards, But Cards Nonetheless

Guess which group of people is defaulting on their mortgages at a higher rate than anyone else, subprime, prime, or jumbo?  If you said "Well it has to be subprime, those people never should have gotten mortgages in the first place" then I have a tale to spin for you, friend.

No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic. 

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent. 

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist. 

Just because you're wealthy doesn't mean you can't make a bad investment, and buying a million-dollar home at the market peak and then seeing that value drop to say, $600,000 in a couple of years is a really, really bad investment.  The difference is these are folks who often have other assets and can walk away from it and recover.  The folks who have 90% of their total wealth tied up in a home that has lost 30% of its market value since 2007, those are the ones in real trouble.

And it's not like enterprising souls can trade up to these cheaper McMansions because they can't sell their existing homes to free themselves up, and if they did, they'd take a similar percentage hit on the home their are trying to sell to trade up.

It's not poor minorities walking away from their homes here at nearly twice the national average, folks.