More Million Dollar Chicago Condo Foreclosures
How does someone who buys a condo for over a million dollars get into financial trouble barely a year later?
I am seeing more and more of this. The foreclosures are not just buyers with a subprime loan in a so-so neighborhood. Many of them are also richer people living above their means, and also with a risky loan, who are losing their homes.
The latest is:
18 W. Chestnut in River North/Gold Coast:
- Sold for $1,100,000 in March 2006
- Auction price of $926,858
I don’t have any details of the unit (size, amenities.) But these owners got into financial trouble almost immediately on this loan.
Subprime isn’t just about people with poor credit–it’s about anyone, good or bad credit, getting a loan that doesn’t qualify as prime or alt-a. Perfect credit and $150k annual income is great, but for a $900k+ mortgage sure isn’t a prime borrower–with taxes and assessments, annual payments on a 30-year amortizing mortgage would be north of 50% of gross income (or close to 70-75% of net).
Are you saying that the owner of 18 W Chestnut only had income of $150,000 and perfect credit and that because the payment was over 50% of gross income that they can not afford the payment? Or are you just using those criteria in general?
If true- then why are they buying that property? Anyone can run the numbers and see that the math doesn’t add up.
Someone with perfect credit is NOT getting a subprime loan.
Just made up numbers.
If you are saying that lenders have been deeming a borrower subprime based solely on credit history–w/o regard to income and amount borrowed–then the responsbility for the bubble lies only with the lenders who have completely ignored basic loan underwriting. $150k income and $900k mortgage is a subprime situation and those types of borrowers are definitely out there–maybe not so much in Chicago, but lots in Cali.