Celebrity Foreclosures: Economic Woes of the Rich and Famous

Recent economic difficulties have left many homeowners in an untenable situation; housing values have plummeted, leaving them with mortgages that far outweigh the home’s current worth and creating the potential for foreclosure. Average homeowners are not the only ones hit by the economic crisis, however; the rich and famous have seen their share of financial difficulties due to poor management or recent economic downturns as well. As a result, a number of well-known and celebrity foreclosures have taken place in recent years; while these rarely have the same catastrophic effects for stars as for private individuals, they can still create unfavorable publicity and damage the celebrity’s public image.

Nicolas Cage

Despite his high-profile box office status, Academy Award winning actor Nicolas Cage recently lost two homes in New Orleans to foreclosure proceedings. According to public records, Cage owed more than $5 million in past due mortgage payments and back taxes. Cage’s financial woes had made headlines earlier in 2009 when he filed suit against Samuel Levin, his longtime business manager, for financial mismanagement, misrepresentation and incompetence that cost Cage millions while allowing Levin to pocket substantial fees.

Stephen Baldwin

This follows on the heels of Stephen Baldwin’s much-publicized foreclosure proceedings earlier in the year. Baldwin’s home on Old Mountain Road in Nyack, New York, was listed at $3.4 million at one point, but after it failed to sell, two separate mortgages fell into default and required tax payments became delinquent, necessitating the foreclosure and auction of the property.

Ed McMahon

Ed McMahon was among the first celebrities in recent years to feel the sting of public foreclosure; his Beverly Hills home was in default with almost $5 million in outstanding loans. McMahon was ultimately saved from foreclosure by Donald Trump, who purchased the home and leased it back to the actor in order to prevent the loss of the home in which McMahon had resided for the past eighteen years. At the time of purchase, the home had been on the market for about two years.

Evander Holyfield

Heavyweight boxing legend Evander Holyfield narrowly avoided the loss of his Fayetteville, Georgia home to foreclosure. The 54,000-square-foot home included a bowling alley, seventeen bathrooms, and three kitchens. Holyfield’s mansion was scheduled to be sold at auction in 2008, but the sale was cancelled after Holyfield managed to pay off a portion of his outstanding mortgage and to catch up on outstanding child support payments.

Jose Canseco

Some celebrities allow foreclosure proceedings in order to unload a home that has lost significant value while avoiding the inconvenience of selling the property themselves; famed baseball player Jose Canseco’s $2.5 million home was surrendered voluntarily because he felt it was an undue expense considering the loss in value the property had experienced in recent years. “It didn’t make financial sense,” Conseco announced at the time of the foreclosure.

Celebrities typically have at least one major advantage over more typical homeowners; the property foreclosed upon is usually only one of several homes the star owns, and they are usually not financially ruined by the foreclosure process. For most celebrities, foreclosure is an inconvenience that damages their public image, but does not seriously impact their future earnings or financial situation. As the housing market continues to improve, the foreclosure rate is expected to slow down, allowing average homeowners and the rich and famous to remain in their homes and avoid the stress and stigma of foreclosure.

About the Author:
Joe Cline writes articles for Austin Texas Realtor. Other articles written by the author related to Cedar Park real estate and Austin real estate can be found on the net.