http://www.nytimes.com/2010/07/09/business/economy/09rich.html?_r=2&ref=business Whatever happened to: If you give a poor guy 1 million he will blow it If you give a rich guy 1 million he will double it ?
If a mortgage is "non-recourse" but the mortgage terms are as though the loan is "full recourse", then somebody screwed up..... either bank underwriters or local legislators, or both. There is LOTS of non-recourse financing... but it usually involves 30-50% down.
If they make money on the deal, they do not share with the public but if they feel like they are losing money on the deal, they give it back to the bank thus the public gets its share in the loss. This is fhucked up capitalism. Protect the rich phuck the poor. Welcome to new America
What, the rich are the biggest defaulters? I thought we were suppose to blame Barney Frank or the CRA! Are you telling me whitey is to blame for this?? Did Generalissimo Bush not cut their tax rates enough? It is 11:00 AM EST, President Obama <s> is still a negro </s> is still less than 7/8 caucasian.
Not true unless you are only talking about the ultra wealthy, as in multi-billionaires (top 1-2,000 ppl in the world). As monetary wealth is all relative, I would classify anyone in the top 1% net worth as truly rich. The common misconception amongst the fake rich and upper middle class is that once they become truly rich they will just pay cash for everything. They won't need insurance because they will just self-insure... etc... etc. In reality, the top 1% individuals generally carry dramatically higher debt loads than the middle class. They almost never self-insure either. It was precisely the use of this leverage that got them to where they are now. Let's say you have a 1:100 shot at landing in the top 1%. If your attitude is to pay cash whenever possible, you chances are now more like 1:10,000,000. Truly rich people learned that lesson a long time ago. Leverage (use of OPM) made them rich, and only more leverage will get them richer.
Our neighbor is one of the top brokers for Coldwell-Banker in the Newport Beach area. She gave me the following statistics for homes in Southern California: Homes in the $3-5M price range: 72% purchased for cash. Homes in the $5-10M price range: 89% purchased for cash. Homes over $10M: 97% purchased for cash. You don't have to be a billionaire to buy a home for cash. She said the average wealthy home buyer who purchases a home for cash has a net worth equal to about 12 times the price of the house. This is from actual sales data of thousands of homes over the period from 1996-2008. She said that most of her current cash clients are not even close to being billionaires. Their net worth is usually $30-100M.
people who buy multi-million dollar homes tend to be entrepeneurs and business owners, and in order to preserve their privacy they prefer to pay cash.
Maybe that in some cases, but unlike the "wannabe rich", the already rich are (1) more conservative... "leverage" has less appeal to many once they've made "enough", and (2) whatever write-off, if any, they'd get from a mortgage becomes relatively inconsequential to their net worth... so, "why bother".... even if it may not be the "smartest" alternative.