The idea that foreclosures are relegated to the lower income homes that reside in lower income neighborhoods is complete fiction. We wanted to point this out by exploring some situations that has happy home owners owning real estate and then leading to an eventual foreclosure. These foreclosures have occurred recently in the highest price points among the rich and famous. These celebrities were victims of foreclosure or chose foreclosure when holding on to the property was no longer the best financial decision. This is not a condemnation of anyone but is meant as a demonstration to the many different types of homes and home owners that are foreclosed on at any given time.
Criminal charges and high end real estate leads one of the most famous Footballers in America to foreclosure. We started with the most notorious celebrity of recent times. The foreclosure of O.J. Simpson’s home in Florida. It turns out that after his arrest in Las Vegas for Armed Robbery and Kidnaping he was no longer able to sustain his more modest home in Miami. He previously lived in Brentwood, California but apparently he was unable to maintain the LA compound and moved to this 4,200 square foot home in Miami, Florida before he once again found himself on the wrong side of the law. As of this writing the home is headed to foreclosure but the final foreclosure has not taken place. We don’t think being incarcerated is going to provide much opportunity to hold off the banks so it will more than likely go all the way to foreclosure.
After being lead on deep routes by some of the best quarterbacks in football history our second foreclosure is more of a “twofer” as arguably the best known NFL receiver in recent memory received his notice of foreclosure on not one but two separate condos he owned, one in Dallas, Texas and the other in Sunny Isles, Florida. When real estate prices plummeted so did Owens’ desire to keep paying on homes that were underwater. Mr. Owens chose to sell the properties at short sale instead of taking the credit hit and was successfully able to avoided foreclosure on both of the condos he owned.
The man that personified the 1980’s like no other was once the Pride and Joy of the Hollywood elite. That time has passed and now our former “A” lister is following the advice of his financial advisers and making the tough financial decisions rather than making car chase movies and avoiding being tied to a property that he bought at the height of the real estate market. Spikes in real estate leads to dips and Mr. Reynolds was one of the millions caught in the down cycle. The property was once valued at close to $15 million dollars and is now worth 60% less than when he purchased it. This is commonly referred to as a strategic foreclosure and is a common practice with properties that are substantially under water.
When the girls swirled around the 1970’s TV heart throb who thought that he would be facing a tough decision decades later regarding a rental property he owned in Fort Lauderdale, Florida. As the average American believes that foreclosures are not relevant to the wealthy we are reminded by David Cassidy that indeed real estate appreciation is not guaranteed and owning investment real estate leads to foreclosure more often than real estate that is considered primary residence. David Cassidy is also the son of true Hollywood Royalty as his father was Jack Cassidy, himself a Hollywood legend and brother to Shawn who was also considered one of the hottest stars in the 1970’s.
The well-known movie star and nephew of Hollywood writer, director, mogul Francis Ford Coppola has seen more than his fair share of financial woes. Tax issues resulting from extremely bad financial management combined with being embezzled for millions have all contributed to his real estate leads to foreclosure. Most recently his Bel Air, California home has been lost to foreclosure. Mr. Cage once owned as many as 15 mansions and mini mansions and has been reducing his holdings either through voluntary sales or in some circumstances foreclosure. Cage paid $35 million for the home which sold at auction for less than half of that amount.
Like many of the wealthy people that have been identified in this list LaToya Jackson has voluntarily decided to walk away from a home that she owns in Las Vegas rather than remain in a negative position on the mortgage. The older sister to Michael Jackson should have no financial concerns according to most people but the truth is that she chose foreclosure over suffering the effects of steep depreciation. She once purchased the luxury condo for $260 thousand and over time was able to borrow three times the original purchase price. This came to a head when the real estate market in Vegas tanked and she was left with a decision. Being underwater on a mortgage with a piece of real estate leads to foreclosure ten times as often as one of the main incentive to continue to paying the mortgage is removed. Her choice, like many others that find themselves underwater was to walk away and let the bank take the hit. Another case of a strategic foreclosure that works better for some than trying to pay off a debt that is substantially greater than value of the home.