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...
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.I've written two posts (one) (two) lately about the mortgage interest deduction (MID), and why I think it distorts the real estate market. This trend of higher default is not directly caused by the MID, but as I posit in those posts it's likely that the subsidy to borrowers, banks and others in the real estate field encourage excessive borrowing. Maybe that's at work here.
Below is an excellent graphic from The Times piece (click on the image for a larger view). I will steal no more of The Times's thunder, and suggest you read their coverage first-hand.
Update July 12: The Monday NY Times contains an op-ed on defaults on big mortgages, wrapped around the Housewives of New Jersey.