Before the housing bubble burst and the foreclosure rate skyrocketed to an all-time high, dodgy lending practices were putting risky borrowers into homes that were too much for their financial situation to handle. The faulty belief on the side of borrowers boiled down to this: if a lender says I can afford it, then that must be true.
But average borrowers aren’t the only ones who have managed to find themselves in a home that eventually puts them underwater. Despite having hoards of cash and a well-known name, celebrities have been known to bite off more than they can chew as well.
Here are seven celebrities that had to walk away from their massive mansions despite having millions in the bank.
1. Burt Reynolds
Despite having a longstanding name and place in Hollywood, Burt Reynolds has had plenty of financial woes. A flopped marriage and unsuccessful restaurant venture led to bankruptcy in 1996 and just recently he took a major hit on a Florida estate, selling for $3.3 million despite having it listed for as much as $15 million at one point. The upside? He managed to narrowly escape the threat of foreclosure with this one.
2. Kristen Bell
With proceedings that were clearly meant to be hush-hush, Kristen Bell lost her relatively modest (for celebrity standards) three bedroom, three bathroom, 3,867 square foot home to foreclosure in 2012. Purchased for $3.1 million, this Hollywood abode was apparently too much home to handle.
Unlike the other celebrities on this list, Rihanna’s mortgage woes seem to be more about an unfortunate series of events coupled with shoddy construction. In 2010, her $6.9 million mansion in Beverly Hills endured “extensive” flood damage. She then defaulted on the mortgage and sold it via short sale for $4.5 million. However subsequent law suits claiming wrongdoing on several different parties didn’t land in favor of the singer.
4. Allen Iverson
Add Allen Iverson to the list of athletes that can’t seem to hang on to their mountains of dough. The NBA star saw his $4.5 million Atlanta mansion go into foreclosure after defaulting on a $1.2 million mortgage. Add to that a $3.87 million Colorado mansion that went into foreclosure after ending a stint with the Denver Nuggets, and it becomes clear this player is no stranger to financial woes.
5. R Kelly
While other legal issues made R. Kelly no stranger to the court system, money woes simply compounded the heat from the public spotlight. Kelly’s Chicago mansion, once valued at more than $5 million was sold in a bank foreclosure auction for a dismal $950,000.
6. Nicolas Cage
In 2010, Cage’s Los Angeles mansion, previously owned by Dean Martin, was put on the auction block and sold for $10.5 million. With a sauna, theater, wine cellar, and 6 bedrooms, this 11,000 square feet home carried property loans totaling a whopping $18 million.
7. Evander Holyfield
With 109 rooms, 54,000 square feet, 235 acres, and costing $1 million annually just for maintenance, it’s no wonder Evander Holyfield found himself unable to keep up with the bills on his Georgia estate. While the property sold for a steep $7.5 million in bank auction, that was nothing compared to the nearly double that Holyfield still owed.
Whether foreclosure happens because of changes in income, costly divorce proceedings, a drop in property value, or out-of-control spending, celebrities can teach us this: just because you might appear to have a large amount of wealth doesn’t mean you shouldn’t proactively manage your finances and stay within a reasonable budget.
Things can change at the blink of an eye, and if you want to avoid taking on more home than you can handle, make sure you consider all current and future expenses before signing that mortgage.
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