Foreclosure Proceedings On Neverland Ranch, Michael Jacksons Home

There I am, with my cowboy hat on, my vest, and my vertical coat hanger that was used as my microphone singing “Who's Loving You” emulating Michael Jackson singing with the Jackson 5. I still remember when they had their own cartoon. Despite being recognized as the King of Pop, and one of my all time favorite artists, Michael Jackson had quite a few financial problems. I'm sure he had issues here and there with finances, they became public around 1993 when he was first accused of molestation at Neverland Ranch. This accusation cost him millions in payouts, and in lost revenue due to the incident. There was an estimated mortgage of $23 Million for the ranch, and in 2007 everything caught up to him and he went into foreclosure. On the eve of the the foreclosure auction (sale date), an investment company stepped in and purchased the loan, essentially taking the estate off his hands.

So you have two questions that come to light here: 1) Are celebrities eligible for home loan modifications? 2) What are the investors going to do with these multi-million dollar properties that have clearly depreciated, should a celebrity go into foreclosure? Let's say we have a median home price of $300K, and the average celebrity home is around $5 Million. A lender would have to modify over 16 $300K mortgages to equal out one 5 million dollar home. Simple math would tell me that a celebrities home makes far more sense for an investor/lender to modify the terms of the mortgage.

The answer to question #1 is YES. Depending on the income level, you may not qualify for Government assistance, but it can still make financial sense for the investor/lender to modify the terms. The general public has the misconception about people who make good money. Anyone who has made good money will tell you, “When you make good money, you spend good money”. I don't think I know of too many people who haven't had a reduction in income over the past two years, celebrities are no exception. For musicians you have MP3 downloads that have drastically limited the money they make on their record sales. Most of them have to depend on touring to actually make everything make sense financially. Although movie watching is one of the few activities that hasn't dwindled recently, the funds available to make them and the payouts on them have somewhat dwindled. When the economy is in a tight spot, it generally puts everyone involved in a tight spot as well.

The second question has yet to be answered. Bottom line is that if i'm an investor, I have $5 Million in one account, and $300K in another account, of course i'm going to pay pretty close attention to what that $5 Million account is doing. Furthermore, should I have an issue on that account, I have a HUGE vested interest in trying to get it rectified in a very expedient manner. Obviously what makes sense, is not always what the banks choose to do. But EVERYONE is trying to limit their losses at this point, they have to address the issue at some point.

So why wouldn't more celebrities put in for a modification? If Michael Jackson had put in for a modification of his mortgage, he may still be here. I don't think anyone can dispute the connection between your stress level, and how it affects your health. Nor will anyone dispute that if you're having financial difficulties, that this adds to your stress level. Michael Jackson would have had a pretty good case in getting something done. He still has/had royalties coming in, so he had some sort of income. He clearly had a reduction in income over the past few years. He tried to do everything he could do to rectify his situation (sold/auctioned things that were not “essential”). With a $10 Million mortgage, even a one point reduction in rate would save you around $6K a month. With a $23 Million mortgage, it probably would have been closer to $13K a month. I don't care how much you make, who couldn't use an extra $6-$13K a month?

The majority of celebrities don't ask for assistance because they are embarrassed. On one hand, they definitely need the help. On the other, they feel it's “unbecoming” of a celebrity to ask for help. Lastly, discretion is very important to celebs. If they do need help, they certainly don't want everyone/anyone knowing about it. I'm sure tabloids would have a field day over it. We have established that YES, there are in fact celebrities who need assistance and could benefit from a loan modification. We have established that they can in fact get assistance, under the right circumstances. That only leaves the question of discretion, and at PMC we value ALL of our clients privacy and personal information. Not only do we not sell, barter, or spam your information, but we also have internal company policies which prohibit anyone from dealing with your file than the people that were assigned to it.

Typically, celebrities and VIP's are used to getting top notch treatment, and only dealing with the best in every aspect of their lives. Choosing a company for something as important as your home should be no different. So whether you are a big name celebrity, or working on it, there is someone out there that you can trust.