Moody’s: Jumbos Are Now at Greatest Risk for Default


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EDITOR’S COMMENT: It’s really simple. Most people with jumbo mortgages are people who are more savvy with money than those who have much smaller homes. They are used to having money, not losing it. To them it is a simple calculation: if they stay with the home and pay off the mortgage, they are going to lose a couple of hundred thousand dollars. If they don’t stay with the house and take the hit on their credit score, they don’t lose that money. They have already lost their down payment and whatever extra money they put into the house when they thought they own it forever. Why throw good money after bad?

The answer for those  who are called rich is that they are walking away like any businessman does when he realizes the deal has gone bad. And the great likelihood is that the number of defaults will surge substantially as this new wave of foreclosures based upon strategic defaults come to the fore. The curious thing is that there seems to be a moral double standard at play here — the more money you have, the less likely you are to be stigmatized for simply refusing to pay.

The Wealthy Are Also Defaulting on Their Mortgages

There are many who believe that mortgage delinquencies in their region are concentrated in the middle-to-lower income neighborhoods. Actually, the research shows the number of delinquencies in the higher priced sections are currently exceeding the percentages in less affluent areas.

The most recent Mortgage Monitor issued by LPS reports that the largest increase in both delinquencies and foreclosures, as compared to 2008 levels, are in ‘jumbo’ mortgages. A jumbo mortgage, according to Wikipedia, is:

“a mortgage loan in an amount above conventional conforming loan limits…the limit is $417,000 for most of the US.”

In some parts of the country, that limit can be over $625,000. This type of loan finances the higher priced properties in a marketplace.

According to LPS, the percentage increase in jumbo mortgages is as follows:

  • Delinquencies: increased 281%
  • Foreclosures: increased 589%

Again, these numbers are greater than any other type of loan including Option ARMs and Sub-prime loans.

Strategic Defaults

That doesn’t necessarily mean that the more affluent don’t have the money to meet their mortgage obligations. In some cases, they see their home as a depreciating asset and determine that continuing to put money into it makes little sense. The Washington Post recently reported on this. In the article, they explained:

“The ratings agency Moody’s said that based on its analysis of mortgage-backed bond portfolios, homeowners with jumbos now constitute “greater strategic default risk” than any other type of borrowers, including subprime. That’s because an exceptionally high number of jumbo owners — many in high-cost markets hit by real estate deflation over the past several years — are stuck with persistent negative equity.”

Bottom Line

We often explain that the number of distressed properties in a neighborhood adversely impacts values of other homes in that area. It now appears that even the most affluent areas will be dealing with a supply of discounted properties entering the market as foreclosures.



23 Responses

  1. Foreclosure Sale postponement services. No up front fees. Take action to defend against the fraud.

    Holding the banks accountable is your job. If you do nothing, they will take the home.

    Due process is the only process where you get to defend yourselves in court.

    Good luck with your decisions.

    United We Stand and Fight!

  2. What Is Daisy Chaining?

    In investing, daisy chaining is a strategy that involves creating a false impression of the movement of a given security. The process of daisy chaining calls for the creation of a series of transactions that make the security to appear more active than it actually is. This appearance of robust movement makes the security more appealing to investors and may in turn spark genuine interest that creates real movement.

    While the practice of daisy chaining was once very common, that is no longer the case. Many nations have enacted legislation that defines this strategy as being illegal. There are two main reasons that governmental regulations prohibit the use of daisy chaining. First, the strategy calls for the development of a series of transactions that are not genuine. Because daisy chaining is based on the creation of a false impression, the method may have some degree of impact on the natural activity on similar securities.

    Second, the goal of daisy chaining is not always the result. While the strategy is to create genuine movement by creating a perception of activity already taking place, the exact opposite may occur. When the false momentum created by the daisy chaining attracts a few investors, they may quickly find their investment rapidly dropping in value once the false transactions are discontinued. The end result is that investors may lose a great deal of money based on false information that was intentionally made available to the trading community.

    The creation of this type of illegal brokering scheme requires the participation of both brokers and investors. An investor who wishes to stimulate the activity on a given security in order to raise the price per unit and then sell at a profit may work hand in hand with a broker to create an illusion of an upswing in value for the security. When several investors and brokers are involved in the project, they are referred to as a daisy chain.

    While the name for the strategy may appear to be simply colorful, there are some similarities between an actual necklace or chain made of daisies and the daisy chaining of a given security. In both cases, the daisy chain is quite attractive to the eye. For a period of time, both chains will seem to function very well and generate some degree of interest. Ultimately, both daisy chains begin to weaken and eventually fall apart, leaving behind little or nothing of value.

  3. usedkarguy you said what doesnt. but what does?

  4. […] Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, jumbo, LOAN MODIFICATION, modification, Moody, quiet title, rescission, RESPA, securitization, strategic default, TILA audit, trustee, WEISBAND Livinglies’s Weblog […]

  5. BOB, yes, I got mine yesterday. A complaint was filed with the OCC two months ago (no response from that yet) regarding the robo-hobos and assignment fraud. Followed up with copies of the doctored/altered/fraudulently endorsed note that appeared post BK filing. These people have balls the size of New York! I called and the reviewing company for Wells Fargo is RUST CONSULTING. Remember, you must have suffered a FINANCIAL LOSS. All the torture calls, bogus sheriff sales, bogus litigation, fraud on the court, stomach aches, head aches, home inspections and knocks on the door by the Orkin rats, and suicides don’t really portend a
    “financial loss”. Just so you know.

  6. Yes, they’re real lawyers: Booth at Boynton mall peddles foreclosure advice

    ByKimberly Miller
    Palm Beach Post Staff Writer

    BOYNTON BEACH — Just south of the food court and past the $15 “designer style” jewelry stand is an unusual mall kiosk staffed not with vendors hawking holiday ware but attorneys offering legal advice.

    The Law Booth at the Boynton Beach Mall was opened Nov. 1 by three Palm Beach County attorneys who said they saw a need for legal counseling outside normal business hours and the traditional office setting.

    Founded by Melva Rozier, Richard Carey and Paul Burkhart, the stand, which sits outside American Eagle Outfitters, is typically open from about 10 a.m. to 8 p.m. with “Walmart”-priced advice on legal matters including foreclosure, bankruptcy, estate planning and family law.

    They were even open at 4 a.m. on Nov. 25 for Black Friday shoppers.


  7. I heard Credit Suisse is buying Aurora Bank and found that the two
    articles from the Denver Post appearing to address this won’t open. Gone. Dead end. Hmmm…..But I did find this pretty alarming tidbit discussing Credit Suisse’s alleged U.S. lending m.o., including allegations of secret deals with Iran (think source of funds). The attitude of the author is smarmy imo, but it is nonetheless informative:

    Yeah, this makes me nervous. We’re seeing the golden rule just now, you know the one where the bankster with the gold rules or at least is trying like heck. Don’t know that I wanna see what this is gonna look like if it becomes predominantly foreign interests.

  8. Trust me Shelly, I know a lot of what you say, but it is even more simple, prove you have the paperwork that I allegedly signed X years ago, and that it is an original. No original exists, and without it, no grounds to foreclosure. Just a matter of standing your ground, and I have for four years now, and will not stop……

  9. Correct me if I am wrong, but should everyone recieving these imposter request and they are all imposters be given a notice by certified mail that they have the autority to collect this alleged debt? And to prove they have the PSA/Note transfered to the foreclosures name and or the bank they claim to be foreclosing for dated before the ninety day statute closing date of the trust? Sending them the proof I just put on the sight here. I would send them a copy of the web sites to the infor it is cheaper than the hard copies.

  10. “The REMICs have failed! “The REMICs have failed!” | Deadly Clear
    10:46 AM
    RCW 40.16.030: Offering false instrument for filing or record.
    8:13 AM
    Look up your state CPA laws and Deed of Trust Law and if you are in Washington State or Mass or Delaware, or Nevada, your attorney general has listed the state statutes of violations on their complaints See Washington State V. RECONTRUST. and State of Nevada V Gary Traffor, Gerri Sheppard and Mass V. BOA, Chase, GMAC, Citi, MERS, ET Al. Then look up livinglies version of Houston We Have A problem Bevilaqua V. Rodriguez and the case itself. and the Ibanez case. THey are case law for every state in the U.S.

  11. Pam Edwards, I have emailed you some info, and Neil Garfields group the LiminaQTeam does forenzic analysis of your loan. Look up your imposter (they all are) debt collector. Chase nor Deutsche nor RECONTRUST, are licensed to do business in WA per the WA DEED of Trust Act and the WA CPA statutes. I believe most of them if not all of them are not. Ask them to prove the date the PSA was transferred or reassignment was transferred. If they send you proof it was over 90 days after you signed your contract plus 90 days and or after the closing of the Trust, which the PSA has to by law be transferred tothe trust within 90days the contract/note is VOID. See “The REMIC’s have failed!, The REMIC’s have failed!- Deadly Clear. It has a sample of how to determine the PSA/REMIC is void.

  12. The four fraud patterns; assignment fraud, endorsement fraud, affidavit of indebtedness fraud, and notarization fraud.

    At Naked Capitalism Michael Olenick detailed how easy it is to spot the industrialization of document creation and execution by looking at where people signing the documents are. Based on his analysis of Palm Beach County records, there’s factory floors in:

    “35 different states, and 101 different counties…

    “…California overall notarized 815 Florida assignments, 32.6% of the total. Florida, which you’d expect, came next with 610 assignments, or 24.4% of the total, followed by Minnesota (9.3%), Texas (7.3%), Ohio (4.8%), Georgia (4.5%), Louisiana (2.8%), and Nebraska (2.6%). All other states had less than 2%.

    Banks and their vendors like LPS run these knock-off document factories, producing documents that are just like those cheap purses with fake luxury labels sold in Chinatown. That is, the documents look right but couldn’t be more false.

    Actually, the documents produced in the document factories are more fake than knock-off luxury items because counterfeiting is about mimicry, accurately copying the original. These documents have no originals to copy; they are pure fabrications. And not even their creators or the people who give them to courts believe that they mean what they say. Everyone’s clear that these papers are created to check legal boxes that the mortgage servicers and traders long ago decided were irrelevant to their business models.

    The name I have for what’s going on in these production facilities is “document fraud.”

    By document fraud, I mean specific fact patterns, not a specific crime. It’s the difference between saying someone’s intentionally starting fires and saying they’re committing arson.

    Document Fraud Defined

    Specifically, I mean four fact patterns; assignment fraud, endorsement fraud, affidavit of indebtedness fraud, and notarization fraud. I spell out each in turn:


  13. I was sent mail to my address with Deutsche Banks name on the envelope, from the attorney generals name on it and the CPA department, so I believed it was meant for me since Deutsche Bank is the perpetrator trying to steal my home after a fraud modification loan dragging me into alleged foreclosure. So I opened it, and it was meant to go the Deutsche Bank that is not registered in this state and has no authority to do business in this state and was regarding a woman that has a similar address but in a city three hundred plus miles from me in Spokane WA. There was an imposter asking for all her info and claiming they were selling her home at action in two hours after I opened the letter. I emaile the CPA office and phone called the lady whom the foreclosure notice was given and told her of the mis mailed mail and to do everything she could to contact the CPA office. It is obvious this imposter had sent her a letter that if she disagreed with their authority to make an objection and she was told by someone she did not disclose to me that she should just ignore the letter because it was a fraud imposter debt collector North West Trustees was on it. I begged her to call and or email them or what ever it took to object to their authority to foreclose and gave her all the info I could that Deutsche Bank is unlawfully foreclosing without being registered to do business in Wa. She claims she has no loan and her house is paid in full. She has never been behind in payments and has someone helping her legally. I did not want to dig into her personal info. It is not my place. I just wanted to help her. She was questioning why I called and whom I am. Dont Blame her. Just an advocate for justice. I told her I was being pursued by Deutsche Bank also, is why I know so much about Deutsch bank. The debt collectors are unlawfully foreclosing in most states without being registered to do business in that state due to the State CPA laws and the STate Deed of Trust Act statutes. They make false claims they are not subject to state law, but the attorney generals in the few states that have filed against them beg to differ. Read the Nevada attorney general 450 page claims and the Mass attorney generals claims and Washington State V. RECONTRUST, filed by Rob McKenna claims. I am disappointed Rob McKenna has not come forward publically with more law suits as he claimed he would in his video that was taken by a private person you can watch if you type in Washington State V. RECONTRUST, Rob McKenna video. If you look at the license department in your state and the corporate license, you will find the bank, the lenders, the financial institute, the corportation licenses are either no match found or inactive and are not registered. They can not use a third party as they claim like CT Corporation, whom has been set in place by the banks to steal for multiple banks. My son is BOA AND RECONTRUST, I AM CHASE DUETSCHE BANK AND they both pretend to use CT Corporation.

  14. Trust no bank or lender to be doing the right thing. Call your attorney general office if you can trust them. Not in Florida I know. Neil Garfield had a list of local attorneys he has taught siminars to, that may be in your city. I trust myself. I am doing everything I can Pro Se, it is scarey and I may not succeed, but I trust myself first. I have had very bad experience in the Washington state area. Look up case law in your state and the case law from Mass and follow it by example if you choose to be Pro Se. In Washington State our legistlators passed a fair foreclosure act. The first thing they wanted before they would help you is for you to admit you owed the debt, and that killed it for me right there. It was a pat on the back fair foreclosure act, that the banks jumped right in to help with, and the government agencies set up to help, told me we dont have the funds as Pro bono help to litigate for the homeowners we just have the funds to negotiate a fair deal between me and the perpetrators that have victimized my, my familie, and all Americans, not heip the investors or the right party get the money, just enough money to force me as their victime to work wiht the banksters. I was PEOD. She said she did not look at it that way I said “I DO!”. and that was that.

  15. Bottom Line.

    The People Are Broke.

  16. I would only send this info to OCC or the government agencies that are in control of your issues. Call your Attorney Generals office and ask whom this info should go to and make sure you sign nothing that admits to you owing a debt. Call the mortgage an alleged debt that you demand the proof of the authority to collect. I would not give someone your personal info unless it is going through the OCC or the agencie that controls the debt collector and bank making false (I am sure of it claims), I am not an attorney and I know it is hard to find one that gets it or is willing to help, so this is just my opinon as a Pro Se. The article “The REMIC’s have Failed! The REMIC’s have failed !-Deadly Clear (is after the first part) This is very important info with the Report that mostlikey will save your home. As the imposter debt collectors to prove authoritie to collect and a PSA(REMIC) THAT HAS NOT FAILED. This article has the sample on how to figure this out for your self. Then have Neil Garfields group do your loan anklysis, and PSA analysis and Title report. i do not work for Neil. I had his group do mine and am very happy with them and they are inexpensive. I am actually just now requesting the loan analysis, I had the other done and they are very effencient and reasonalbe. I have had to many customers and freinds tell me they were taken with no info from local pretender help at as much as six thousand in cost. and were taken to the cleaners when they were pursuing help. I trust very few, it seems like the evil ones are under every bush..

  17. Incognito, I agree, why are they not fighting to keep their homes, their incomes have been ruined by the banksters,”Wall Street and the Financial Crisis; Anatomy of a Financail Collaspe” report for the Senate sure seems to be ignored and not read. And the “artilce” The REMIS’s have failed and the A new report by Oppenheim Law reveals the Back Magic of Securitized Trust, failed and the PSA were not transfered and are void, and the imposters claiming transfers after the 90 day by law timebar, are fraud, void and nullified as a matter of contract and statutes. Pull Up the Article “The REMIC’s Have Failed, The REMIC’s have failed.” And the Oppenheim Report. Then there is the Bevilaqua V. Rodriques Case law and Inbanez case law. They are allowing criminals to take a house that is theres by law due to the banks own crimes. I would gladly sit down with the ones whom were taken for their investment they are hidden by the bank crimes and the only way to defend our homes is to make the law by law follow the law and defend our homes. They are not under water They are paid for by law and by the crooks own hands. The real investors are in jepardy to make any claims to the mortgage because of the tax issues and liablities due to the banksters crimes against them putting them in in jepardy. The only way to stop this crime is to defend our homes. The banksters do not deserve them. and neither does the FAnnie and Freddie entities. They are apart of this crime against tax payers and Americans.

  18. Bob,I too have received the same paperwork that you have,and I must say feel the same way about shipping paperwork to a P.O. Box.Have asked for advice on how to proceed so far nothing yet.

  19. My only comment is why are they not fighting tor THEIR home? Mr Lentz in Florida has been fighting two (one was dismissed) foreclosures for nine years now, I commend him! He keeps saying “prove I owe YOU any money” to the two different banks that have claimed ownership of the same mortgage on his multi-million dollar home..

  20. This Video sounds like , we never get back on the road :

  21. i have recieved a foreclosure review request form from independent foreclosure review/WACHOVIA, you are recieving this because the above property is or was active in the foreclosure process between rules– jan. 1 2009 and december 31, 2010, property must be primary residence—- board of governors of the federal reserve system and the office of the comptroller of the currency (federal bank regulators) have required an independent foreclosure review to identify customers who may have been financially injured as a result of errors, misrepresentations, or other deficiencies made during the foreclosure process. wachovia mortgage’s records indicate that your loan may meet the iniial criteria. it does on many fronts 1- mortgage must have been less than actual amount of foreclosure, 2- did everything i possibly could do on modification and but foreclosure sale was still attempted without success., 3–fees and mortgage payments were inaccurately calculated, processed, or applied. i received this information to dispute anything that is on my credit report. first advantage consumer disputes address—12395 first american way, poway, calif. 92064, i dont want to send information to a po. box 2588 fairbault, min. 5501-9982 has anyone run across this type of form ??? bob.

  22. […] Visit site: Moody’s: Jumbos Are Now at Greatest Risk for Default […]

  23. Your quote…”They have already lost their down payment”…. end quote.

    This to me is the biggest scandal going around. Why should people lose their down payment if they are foreclosed upon? loss of downpayment just creates an extra motivation to foreclose on the homeowner, especially early on.

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