Celebrity dopes: Installment No. 5,387
Nicolas Cage lost another home to foreclosure last week. Is he doing this just to make the rest of us feel better?
This post comes from Marilyn Lewis of MSN Money.
Celebrities, they’re just like us! They grocery shop (occasionally), fight and make up (a lot) and look awful when they’re caught without makeup. Also, like quite a few of us, they lose their homes to foreclosure.
Zillow, the real estate site, devotes a blog to celebrity foreclosures. Here you can learn about the troubles of former heavyweight champ Evander Holyfield: He’s not only behind on child support payments but his $10 million“palatial estate in Fayette County (Georgia) is under foreclosure” and “set to be auctioned by Washington Mutual Bank on July 1.” Mr. Holyfield, 45, declined to comment.
Slave-to-fashion Nadya Suleman, whom you probably know as “Octo-Mom,” is in on this trend, too. A roundup of celebrity foreclosures, according to Zillow, includes such luminaries as Wayne Newton, Latrell Sprewell, LaToya Jackson, Stephen Baldwin, Wyclef Jean and Lenny Dykstra.
Like us? Yes and no
On the other hand, Nicolas Cage? Maybe not quite so much like us: His Tudor Bel-Air mansion was on the foreclosure auction block last week and the house is reportedly so eccentric that even the Realtor describes it as "frat house bordello." Among the oddities: 300 elaborately framed comic book covers on the walls (See a Los Angeles Times’ slide show).
The place had been owned by a succession of rich-and-famous types, including (on separate occasions) Dean Martin and singer Tom Jones. A while back Cage had tried unloading it for $35 million. But last week there was not one bidder, even at the bargain-basement price of $10.4 million.
Cage is notable for his remarkable foreclosure track record: Banks repossessed two other of his homes, in New Orleans’ desirable French Quarter and Garden District, last fall; the actor owed $5.5 million in mortgage payments and $151,730 in city property taxes on those homes .
But, in my book, the most intriguing thing about Nick Cage’s LA house (I hesitate to call it his “home.” Did he really live there? This LA Times story says Cage’s former agent claims the star owned "15 palatial homes around the world." Cage blames the agent for bad advice and they’re suing each other.) is this: It’s drowning in the same kind of debt that’s sucking millions of other American homes into foreclosure: cash-out refinances.
Call me naïve (and you will, won’t you?) but I assumed that real estate buyers this rich don’t need mortgages. And yet, it turns out many of the folks who live large are doing it on borrowed money. And now plenty of them are in big trouble: “Big borrowers are more likely to default than ordinary people,” says The Wall Street Journal in a recent article, “Foreclosures hit rich and famous.”
Cash-out refis on crack
The Journal says:
Houses with loans of $5 million or more will likely see a sharp rise in foreclosures this year, according to a RealtyTrac study for The Wall Street Journal.
Just this week, a Tudor mansion in Bel-Air belonging to film star Nicolas Cage was in foreclosure auction and reverted to the lender. On Wednesday, Richard Fuscone, a former top Wall Street executive, declared personal bankruptcy, forestalling a foreclosure auction that had been scheduled this week on his 14-acre Westchester mansion. Last month a Manhattan condominium owned by Italian film producer Vittorio Cecchi Gori was sold in a foreclosure auction for $33.2 million.
Cage’s Bel-Air property has -- get this: six mortgages totaling $18 million. I ask you: What were his lenders thinking?
The LA Times says:
Borrowing against it included a first mortgage of $425,000 in 2005 and, in 2007, a second of $10.35 million and a third of $5.5 million.
The fourth, fifth and sixth loans, totaling $2.1 million, all came in 2008.
The Times goes on:
The pattern of repeated borrowing against equity is familiar to Bob Baker, sales manager of County Records Research, a Huntington Beach-based company that supplies information about foreclosure properties.
"This is a microcosm of what's going on in our state," Baker said. "We've seen as many as 13 loans on a house."
So here’s my question: Is poor judgment on such an outrageously grand scale -- foolishness by not just celebrities but also by financial experts and lenders -- sort of reassuring to the rest of us? It tells us what we want to know, that money doesn’t buy brains, that even folks with loads more zeros in the bank than we’ll ever see plus access to high-priced financial advisers still can make gigantic blunders.
So, maybe we’re not hopeless dopes either. Or at least we’re hopeless dopes in good company.
And is that a bad thing? Maybe celebrities really do earn all those millions after all, acting as scapegoats so the rest of us can sleep at night, secure in the knowledge that there are even bigger fools than we are.
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