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Elvira and James Grau lost their $3 million home in Cresskill, N.J., to foreclosure when Don Smith/The Record/MCT Visit the Photo Place |
By Kathleen Lynn
The Record (Hackensack, N.J.)
HACKENSACK, N.J.--
Elvira Grau, a party planner who appeared on "The Real Housewives of New Jersey," and her husband have lost their $3 million Cresskill, N.J., home to foreclosure.It's one of a growing number of high-end foreclosures--a sign that housing distress is not limited to lower-income neighborhoods.
Elvira and James Grau own Space Odyssey, a former warehouse in Englewood that they bought in 2005 and turned into a 26,000-square-foot entertainment venue. Elvira Grau made an appearance on the "Real Housewives" reality show in 2010, planning a party for one of the show's stars, Teresa Giudice. But the Graus were apparently not able to keep up with the $17,500 monthly payments.
Million-dollar-plus foreclosures like the Graus' are rare, but are on the rise, according to RealtyTrac, a California company that follows the foreclosure market. Although the number of foreclosures on properties with mortgages over $1 million is still tiny--less than 2 percent of all foreclosures nationwide--it has more than doubled since 2007, RealtyTrac said.
For buyers of luxury homes, the rising number of foreclosures in this price range offers the potential for better deals, since foreclosed homes generally sell at discounts that could total hundreds of thousands of dollars.
As in the case of the Graus, high-end foreclosures often involve business owners, according to several observers.
But whether it involves a $200,000 house or a $2 million house, the basic story is the same. During the housing boom, households took on too much debt, in the form of mortgages or home equity loans. Often the mortgages were exotic loans with low initial payments that were followed by higher costs later.
When families faced job losses or other economic setbacks as the economy fell into recession, many found they couldn't keep up with the mortgage payments, said Daren Blomquist, a RealtyTrac vice president.
High-end homeowners in trouble have taken longer to fall into foreclosure because they typically had more of "a financial cushion to fall back on, to keep making their mortgage payments," Blomquist said. "They've been able to hold out longer."
Phyllis Salowe-Kaye, head of N.J. Citizen Action, the state's largest housing counselor, said these homeowners often took equity out when their houses appreciated in value during the boom.