Double Standards on Mortgage Defaulters
Reporter David Streitfeld's Friday front-page story, "Biggest Defaulters on Mortgages Are the Rich," appropriately showed little sympathy for "well-off" people losing their fancy Silicon Valley homes:
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 CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default.
Nothing wrong with a dose of moral populism. But the Times should apply it to the middle-class as well as the people it considers the immoral wealthy.
Streitfeld made the Times' front page on June 1 with a similar story from further down the income scale, but his tone was far more sympathetic, championing financial irresponsibility on the part of some St. Petersburg, Fla., homeowners. The headline: "Owners Stop Paying Mortgages...and Stop Fretting About It."
Unlike his appeal to the rich about "the civic good," Streitfeld didn't challenge the freeloaders on moral grounds when they refused to pay what back home loans but chose, in at least one case, to hit the Hard Rock Casino instead:
A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.
This type of modification does not beg for a lender's permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.
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