by Calculated Risk on 1/11/2010 09:00:00 AM

From Bloomberg: Dubai’s First Foreclosure May Open Floodgates in Worst Market (ht Nanoo-Nanoo, Steve)

Dubai’s housing rout sent prices down 52 percent in the past year, prompting some homeowners to abandon their cars and mortgage payments and flee the country. Not one received a foreclosure notice.

Until now.

Barclays Plc won the sheikdom’s first foreclosure cases in court, clearing the way for lenders holding about $16 billion of Dubai home loans to take action when borrowers don’t pay.
...
Moody’s estimated in September that 12 percent of the 27,000 residential mortgages in the sheikdom would default within 12 to 18 months.

Banks and developers until now have avoided the process of reclaiming homes through the courts, barred by tradition and an arcane legal process that few understood. The Barclays and Tamweel cases may change that ...

It is amazing that this is the first foreclosure given all the skips (expats fleeing the country to avoid debtor prison). But Dubai has lacked a clear legal process to handle foreclosures. As reader Steve joked, it is not so much "walk away" in Dubai but "fly away" defaults.