Trouble in Paradise... Hamptons hit by foreclosure crisis

Trouble in Paradise... Hamptons hit by foreclosure crisis

www.nypost.com
(visit the link for the full news article)

Somehow I find it hard to shed a tear... even a crocidile tear.

Actually if there is any measure on how bad its getting out there this should be considered a significent bellweather.

www.nypost.com
(visit the link for the full news article)

Nor can I.

I don't think its necessarily a good indicator of the overall housing picture. Most of those people were living well beyond their means, trying to outdo their rich neighbors and friends and now its finally coming back to bite them. No, with this group, I think its probably more a lack of good financial sense than a macroeconomic problem. They're wasteful, irresponsible idiots, not working class people just trying to survive.

I am not sure I agree... at that level... $1,000,000+ homes, you need a little more than just a signature to get in the door.

Look at it this way when even the marginally well heeled are hurting, you know it means worse for everybody else.

reply to post by grover

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That's the point. If you're living in a million dollar home, you've obviously got a pretty good income and aren't truly hurting for money. That still doesn't mean that you haven't bitten off more than you can chew, however.

I wonder how many of them are also driving $100,000 cars and have a half-million dollar yacht?



[edit on 12-5-2008 by vor78]

....and yet maybe its something like this that might get the govts attention on the issue more seriously. how many of these rich folk might be potential "campaign contributors"?

personally though i do find it amusing :

good find grover

I a bit confused as to how the 'elite' could be imposed with a foreclosure.

Unless they just purchased the place, and are in debt for the full amount of $1+ million, how could they not sell at a loss rather than the foreclosure.

Is it better (more financially prosperous) to foreclose rather than sell it at a loss to pay off the creditors?

And yes, before everyone states the obvious that no-one can afford it thus the reason for foreclosure. I am sure many people would jump at the chance to own a place in the Hampton's at a bargain basement price.

reply to post by Grailkeeper

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Even if they sold at a loss, they'd still have to pay off the remaining balance of the loan at the time of the sale.

Most of these people are probably declaring bankruptcy on just the home itself. In that case, they may be able to hand the front door key back to the bank and walk away owing nothing. The bank usually then sells the house for whatever the payoff amount is. So yes, it can easily be a better financial proposition to just walk away than to try to sell it for a loss.

Aren't these people rich enough to pay cash for their houses? I can understand poor people getting behind on house payments, but this is a rich man's neighborhood.

reply to post by groingrinder

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I would suggest people read the Millionaire Next Door by Thomas J. Stanley and William D. Danko. Most people who flaunt the "rich" lifestyle aren't really wealthy. They just look the part "Big Hat, No Cattle" as they call it in the book.

reply to post by groingrinder

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It goes back to what I said earlier about people living beyond their means. A lot of them probably aren't truly rich, but probably making closer to $150-200k year, or about $10k-12k/month after taxes. That's a lot of money, but certainly not enough to drop $1M cash to buy a house. They're wanna-be rich people. So, they get a loan. A 30 year mortgage on $1M at 7% costs around $7,000 per month. There's half their monthly wage or more Next, they need a $100,000 Mercedes. 5yrs at 7%=$2,000/month. And so on.

Pretty soon, they've overextended themselves and like the average working class slob, virtually all of their income is going solely to pay bills. Then, you have an economic recession. Maybe they get a $10k/yr pay cut or perhaps their mortage had a variable rate. Either way, now say they're short $1,000/month.

Just like the rest of us, they have no way out of that situation, except bankruptcy. Yet if they'd lived more within their means, it never would have happened.

here's the deal with the hamptons. the homes out there range in prices from normal pricing to ridiculous. the very high end stuff has been extremely overpriced for years and the area is due for a correction. The folks that buy these homes are more often new money these days as the old money folks have their estates and don't move around. the new money folks are often wall streeters or other such types who are not enjoying the cash flows they did in years prior and, as a result, they find themselves stuck with two homes of extreme cost and one usually needs to go so they can keep the other.

It should be noted that the town of Southampton encompasses a larger swath of the east end than just the village of Southampton.

en.wikipedia.org...

the two towns are host to a ton of celebs and other such gossip page types but they are also host to fisherman, farmers and other such normal folk.

Only 20% of the homes in foreclosure are worth more than $1,000,000, according to the story. Seems to me it's more of the common man getting hurt there than the rich folks.

Because these people aren't the elites they are the wannabes. You have to understand there is a difference between the elites and the wannabes. If you hear of the Rockfellers foreclosing on their house then you can say elites are hurting but it wont happen why? Because they own the bank. These people are hard working people who lived outside their means thats all.

Posts and opinions like this make me sick. If you're a working class hero and you're in foreclosure then you're "just trying to survive" eh? But if you had a great job and finally were able to afford your dream home, and then your employer went under, then you're a "wasteful, irresponsible idiot"?

Forget the fact that so-called "working class" people were the SUBPRIME loans that started this crisis. They were subprime because they ALREADY had bad credit. Then they started buying $180,000 houses with frickin $14,000 down payments, like the woman on the CNN mortgage meltdown show. They sure do try to make you feel sorry for her though.

Unlike subprime borrowers, people who live in the Hamptons could not just walk into a home like that. Even with a 5% or no downpayment or interest only mortgage, the payment would be so high that one would have to have a substantial income to pay it. The fact is that this IS a very good representation of the macro economic picture in the US, as clearly the economy is tough on everyone and even the so-called "elite" of US society aren't left untouched. Rich people have bills to pay too, just like everyone else.

What sucks about being on top? There's always a crowd of people dissatisfied with their own lives who are just waiting to knock you down, or simply sneer if you fall on your own.

reply to post by pavil

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I love that quote, "Big Hat, No Cattle" . I heard that when I lived in Texas. DWF and Huston are having they're share of forclosures for "living high on the hog" as they say. People in the better section of Miami and Ft. Meyers as well as many of the Booming cites are also in the same boat. Those that live beyond they're means are always going to have these troubles. Too bad we are going to be the ones that end up with the bill!
Zindo


[edit on 5/12/2008 by ZindoDoone]

reply to post by sc2099

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There's no doubt that there are plenty of middle class workers who are in the same boat for the same reason. They're just as much to blame for their misfortune as anyone who overextends their credit.

On the other hand, there are a lot of working poor who have been nailed primarily by rising fuel and food costs that they can do nothing about. Many also have variable rate mortgages, which is partially their fault, but also the banks for preying upon people with less education and few alternatives. So yeah, I do have more sympathy for someone who earns $12/hr and lives in a $50,000 house that he's now losing because he can't afford a 2-300% price jump in basic necessities or a 2-3% hike in his adjustable mortgage rate. What's his alternative? In most areas, its either renting (for the same price) or a tent.






[edit on 12-5-2008 by vor78]

These people are probably just doing the same thing that Jose Conseco did!

Former baseball star Jose Canseco has Calif. home foreclosed


He still has the means to pay the mortgage, but it didn't make sense because the house was now worth less than what he was still paying for it!

Letting the bank take the hit instead of themselves!

They could still make the mortgage payments, but refuse to pay a mortgage of, lets say, $2 million on a home that is now only worth $1.2 million.

So they are gonna let the banks take the loss instead of themselves!

This to me is WRONG!

If you still have the means to pay a mortgage that you signed a contract to you should still have to pay it, you shouldn't be able to walk away just because you made an unwise choice in buying a home.

All these foreclosures are only going to hurt the financial institutions, and who do you think will end up paying in the long run?

All these rich people care about is their "money", their "nest egg", they have other homes, they are just getting rid of an investment that was depreciating. (SELFISH is what it is!)

[edit on 5/12/2008 by Keyhole]

My brother from Vero im weighing in from Port St Lucie so you and I have similar positions our area is full of this mess....

With that being said I disagree. When the bank gives a loan they charge 3x the amount of the house to give you that loan. It is a risk they are taking. The banks have been making a lot of money for many many years on real estate and for once they are feeling the reprecutions of the risk aspect. If the banks didnt charge so much money like maybe on a 200k house maybe 50k I would say that is not right for people to do this but as long as they keep charging 400k for a 200k house then im sorry there is some risk and people have the right to walk away from a bad investment.

reply to post by mybigunit

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The bank shouldn't be left completely holding the bag in that situation, IMO. Typically, if you voluntarily surrender a car/house/whatever, you're liable for the remaining principal balance after the bank sells it.

On the other hand, if you want to completely absolve yourself of the loan, declare bankruptcy. The bank gets the property back and you owe nothing. But even moreso than the above, it puts a blight on your credit that lasts for many years.

In either case, I think this is the way it should be, as it punishes both parties.

[edit on 12-5-2008 by vor78]

No doubt about that! Landlords and rental companies can't even get renters into their rentals, people don't even have the money for the first, last ... or the rent money. All these houses are repo'd, and they can't even rent them out! There must be 9 or 10 houses on my street alone with for rent signs in front of them.

But I still feel that, if you signed the mortgage contract and you have the means to pay it, you should!

Maybe if these "richer" people weren't playing this "cut & run" game, the mortgage companies could be a little more lax on the people who are truly having trouble making their mortgage payments on the only home that they have, before the bank forecloses on them and their homeless.

I can see your point of view, I just think it is not a good time to renege on a mortgage if you can afford it, the bank isn't the only one who took the risk that the home would appreciate and not depreciate, so did the the person who signed the mortgage agreement.

[edit on 5/12/2008 by Keyhole]