Upside Down Mortgages

You are just starting to see the tip of the iceberg withluxury short sales," said Adrian Heyman, owner of PropertyAdvisors, a real estate broker in Scottsdale, Arizona. "Alot of wealthy people are upside down in their mortgages andthey just can't afford the second or third vacation homeanymore." There are 114,000 home loans of more than $1 million,according to First American. About a quarter of allmortgaged homes in the U.S. have loan balances bigger thantheir current value, known as being upside down orunderwater, the data company said. The Dow Jones Industrial Average lost more than half itsvalue as it tumbled to a 12-year low in March. The number ofU.S. households with a net worth of more than $1 million,not counting primary residences, fell to a five-year low of6.7 million last year from a record 9.2 million in 2007,according to Spectrem Group, a Chicago-based consultingfirm. The financial-services industry was among the hardest hit bythe recession. While Goldman Sachs Group Inc. set aside arecord $16.7 billion in the first nine months of the yearfor employee bonuses, some Wall Street executives will seepay cuts, according to Johnson Associates Inc., a NewYork-based compensation-consulting firm.