Why It's Better to Default on a $1M Mortgage

Deadbeats stay in pricey homes up to 6 months longer
By Kevin Spak,  Newser Staff
Posted Feb 28, 2012 11:51 AM CST
Why It's Better to Default on a $1M Mortgage
In this May 13, 2020 photo, a brand-new $1.1 million, 5,200 square foot home in Davie, Fla. is offered for short sale Thursday, May 13, 2010.   (AP Photo/J Pat Carter)

If you've fallen behind on your mortgage payments, here's hoping you live in a million-dollar home, because odds are the bank will wait a lot longer to kick you out. Borrowers who default on loans of $1 million or more get to stay in their homes an average six months longer than those with loans of less than $250,000, the Wall Street Journal reports. Sometimes it's even longer—the Journal talked to one lavish home dweller who hadn't paid up in four years.

Banks are more likely to keep big loans on their own books, while bundling smaller ones into securities backed by Fannie Mae and Freddie Mac and selling them. Fannie and Freddie have tight foreclosure timeline rules, and will fine mortgage providers who don't adhere to them. Banks also "have hope for the wealthy," believing they have more potential to bounce back, one real estate lawyer says. Wealthy borrowers also are more likely to have lawyers who can stall the foreclosure process. (Read more mortgage stories.)

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