It seems like just yesterday — excess was in and celebrities lived it up, buying lavish cars, expensive toys and over-the-top homes. Now, they're losing it like everyone else.
Victoria Gotti, daughter of deceased Gambino family crime boss John Gotti, let audiences into her lavish $4.2 million Long Island estate for her reality TV show, Growing Up Gotti. But now, the mafia princess turned New York Post columnist is behind by $650,000 on her mortgage and will likely lose her home.
Part of the problem for some celebrities is that they were allowed to borrow huge amounts of money because of their sizable paychecks during boom times. But Hollywood is fickle, and now some VIPs are struggling with smaller income streams and mortgages worth more than what their homes are currently worth.
Some of them could still manage payments but quit paying because they didn't see enough upside. Former baseball slugger Jose Conseco admitted to simply walking away from his $2.5 million, 7,300-square-foot pad because its value is falling but his mortgage payment isn't. "It didn't make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else," the steroid snitch and reality TV star said last May when he announced plans to quit his mortgage contract.
But even foreclosure is different for celebrities. "My situation was a little more different than most," said Conseco. "I decided to just let it go, but in most cases and most families, they have nowhere else to go."
It's a hard-knock life for Roc-A-Fella Records co-founder Damon Dash. After getting slapped with a foreclosure notice last year — Dash couldn't make his $78,500 monthly mortgage payment on two lower Manhattan condominiums that he bought for $7.3 million — his fashion designer wife Rachel Roy filed for divorce in March.
Faced with hundreds of millions in debt, Michael Jackson needed a helping hand to hold onto his Disney-themed Neverland Ranch. After decades of wild spending sprees and a declining career, he narrowly escaped foreclosure on his $25 million Santa Barbara estate in March by taking a loan from Los Angeles-based private-equity outfit Colony Capital. The singer passed away last week.
New York socialite Veronica Hearst is at the ultra-high end of famous foreclosure victims. The widow of publishing mogul Randolph Hearst lost her $45 million beachfront Florida residence in February. The palatial 52-bedroom second home was sold at a foreclosure auction for $23 million to Ridgefield, Conn.-based New Stream Secured Capital.
Former Phillies and Mets star Lenny Dykstra built up a reputation as an investment guru after retiring from baseball. Unfortunately, he didn't have enough financial savvy to keep his books in order. Dykstra's disastrous foray into publishing — a lifestyle mag for pro athletes called The Players Club — resulted in tens of millions in debt according to reports, putting his $18.5 million mansion in Thousand Oaks, Calif., in jeopardy.
© 2012 Forbes.com