Luxury homeowners default at twice US rate Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers. Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier. Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier, according to data from the Office of Thrift Supervision. The bank regulator doesn’t break out short sales by size of mortgage. There are 114,000 home loans of more than $1 million, according to First American, and about a quarter of all mortgaged homes in the U.S. have loan balances bigger than their current value, known as being upside down or underwater, the data company said. Luxury home prices probably will drop another 5 percent before reaching a bottom in September 2010, according to Sam Khater, senior economist at First American.
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