Lessons Learned From Celebrity Foreclosures

Mortgage companies are often faced with homeowners who cannot keep up with their mortgage payments. These mortgage companies are forced to foreclose or short sell these homes, often for much less than they were sold. This problem doesn’t just affect the average American, it also happens to the so called “rich and famous.”

Even some of the highest-paid celebrities have faced problems with foreclosure. Pop star Rihanna defaulted on a 6.9 million dollar home. A lawsuit has revealed that the singer went almost completely bankrupt due to poor financial advisement. She sued her accountant for “gross mismanagement” and claimed he didn’t tell her that her “Last Girl on Earth” tour was losing money. Rihanna unwisely bought the million dollar mansion despite the fact that her expenses were larger than her income.

Apparently the house was severely damaged by extensive flooding and rotting from water and mold before Rihanna purchase the house. Despite the shady actions of the seller, mortgage companies might question why the pop star didn’t get a thorough home inspection and appraisal before making such a large investment.

Comedian Chris Tucker bought a million dollar mansion during the market high. Sun Trust Bank filed foreclosure papers after Tucker couldn’t pay over 4.4 million dollars on the home. Tucker also owes the IRS over $11 million in back taxes. It appears he did not take into account the interest, market fluctuations and property taxes that affect the price of a mortgage.

Nadya Suleman also known as “the Octomom” filed for chapter 7 bankruptcy and had her home repossessed in an auction that had no offering bids. Suleman began to struggle with finances after the unexpected birth of her 8 children through in vitro fertilization. Although the circumstances in this case were certainly unusual, mortgage companies suggest that it is always a good idea to consider the possibility of unexpected life events that may place a financial strain on your mortgage.

The story of Jamarcus Russell is similar to a lot of professional sports players. It is common for a professional athlete to be promised a huge contract and get carried away, spending the money on a lavish lifestyle before they have even received it in full. Jamarcus Russell bought a 5,800 square foot house before he had even signed a deal with the Oakland Raiders. After poor performances, Russell was released from the team, his mortgage defaulted and he faced a 40 percent loss on the sale.

Jillian Eaton is a finance writer. Jillian writes for Fusion 360, an advertising agency in Utah. Find her on Google+.