We recently highlighted famous athletes who lost their homes to foreclosure. Sad stories, indeed, yet many of these guys seem to be their own worst enemies, and the foreclosure was merely a symptom of larger problems in their lives and/or psyches.
Sometimes, however, the encounter with foreclosure is merely close. And, as all athletes know, close only counts in horseshoes and hand grenades. Let’s take a look at some of these famous folks and how they were able to yank their homes back from the lender.
Allen IversonPicture via businessinsider.com
Allen Iverson’s 14-year NBA record – most valuable player and 11-time All-Star – is the stuff of dreams for rookies. Millions of Americans, however, share his real estate woes.
In March 2011 Iverson’s 6,848 square foot house in Cherry Hills, Colorado, in escrow to a private buyer, went into foreclosure, according to Bloomberg. The home sold in April for $1.5 million (he bought it in 2008 for $3.88 million) and Iverson remained on the hook for attorney’s fees and foreclosure costs. Plus, the courts slapped him with a wage garnishment judgment for over $800,000 he owes to a jeweler.
Iverson’s financial problems, according to rumors, stem from alcoholism and gambling.
A 2007 round-one draft pick, JaMarcus Russell spent three years with the Oakland Raiders and produced a dismal NFL record, despite his obvious talent, according to Nate Davis, sports reporter for USA Today.
Although it wasn’t a voluntary retirement (the Raiders let him go in 2010) the former quarterback went into a downward financial slide almost the minute he left the team. No other team would touch him, a problem only exacerbated (despite the lack of an indictment) by his arrest for possession of a controlled substance two months after the Raiders let him go.
By the following March the lenders knocked on his door for the almost $200,000 he owed in back mortgage payments on his estate in the Oakland Hills area of California’s Bay Area. By September, though, the former NFL star had sold the home for a little over a million dollars, avoiding foreclosure.
The 5,800 square-foot home features six bedrooms, six bathrooms, two half bathrooms, four fireplaces and amazing bay views.
In 2009, Sports Illustrated figured that 78 percent of NFL players end up broke within two years of retirement. Wide receiver Terrell Owens is the poster child for this statistic, although his financial problems were certainly not completely his fault.
Owens isn’t one of those “boys gone wild” athletes who blow money on partying, pricey cars and mansions. He did build a real estate portfolio, figuring that if times got tough he could always rent out the properties.
While that seems like a sound financial plan, the total monthly nut for all of the mortgages came to a hefty $62,500. Then there’s the $44,600 a month he pays in child support to four different mamas. While we all know that houses and kids are expensive, Owens’ payments of $107,000 a month for those two bills alone might burden even the healthiest budget, and they crushed the unemployed Owens.
Owens laid out $1.5 million for a Miami condo in 2006. At the time, the Pro Bowl superstar could certainly afford the $5,126 monthly mortgage payments. Two years into “retirement,” however (Owens suffered a leg injury in 2010 and nobody in the NFL wanted to sign him after that), Deutsche National Bank called to collect either the seven months worth of back payments or the $1.47 million that he still owes on the home. He’s fighting the foreclosure, saying the bank lacks standing in the matter.
In February 2012, foreclosure proceedings began against two luxury condos Owens bought in Dallas. He sold his New Jersey property and is attempting to sell the Atlanta home before Mr. Foreclosure comes knocking on that door as well.
It’s estimated that Owens earned between $60 and $80 million during his 13 years in the NFL. While most of us find it hard to imagine spending that much money during a lifetime, let alone just a bit over a decade, Owens blames his financial advisors and others in his circle of mismanaging and stealing money from him.
While lenders use FICO® scores to determine the risk of lending to the average Joe or Jane, a famous name and a lucrative contract typically suffice for the celebrity athlete, despite the well-known statistics showing that these athletes represent some of the riskiest customers.
Many sports fans don’t understand that famous athletes are basically just like everyone else, claimed Terrell Owens in an interview for GQ magazine. “I may be a public figure, but really, I’m just like a guy who could be in your family and have some difficult things happen to him.”
Yet, put that same famous athlete in front of a mortgage lender and the difference between him and any other “guy” is striking. Fame can sway even seasoned mortgage people and, without a doubt, many athletes receive preferential treatment when it comes to loan qualification.
Yes, it is hard to imagine that someone with a multimillion dollar NFL contract may someday fumble the real estate football. The statistics, though, prove that many will do just that.