Luxury Homeowners in Default Face Lower Risk of Foreclosure!?

If you want to work up a bit of 99% steam, read Felix Salmon’s excellent opinion piece in Reuters, called “Why banks are reluctant to foreclose on expensive homes.” Yes, the once-rich guy down the street who hasn’t paid his mortgage in months may still be enjoying life in his mansion while Joe Average gets both foreclosed upon and evicted.

The reasons, as Salmon explains, need not give rise to any conspiracy theories. Other than the fact that luxury homes are hard for foreclosing banks to to sell, a large part of the pattern has to do with Fannie Mae and Freddie Mac rules. These happen to apply mostly to mortgages on less-expensive homes that were resold on the secondary market. Still, it’s pretty galling.

In the meantime, plenty of homeowners still don’t know their rights when facing a possible foreclosure. For tips on that, see the Foreclosure section of Nolo’s free, online encylopedia.