We're not trying to make light of what is likely a tough situation -- facing injury and long-term disability, leading to the imperilment of mortgage and home -- but it's a little bit easier when we're talking about a multi-million dollar property in Beverly Hills. Via the WSJ comes news that Ed McMahon is the latest known celeb to face housing difficulties, but his are reasons more typical than most:
Ed McMahon, the longtime sidekick to television star Johnny Carson, faces the possible loss of his Beverly Hills home to a foreclosure action initiated by a unit of Countrywide Financial Corp. Howard Bragman, a spokesman for Mr. McMahon, said late Tuesday that his client is having "very fruitful discussions" with the lender and hopes to find a resolution. It isn't clear whether that would allow the 85-year-old Mr. McMahon and his wife, Pamela, to remain in the six-bedroom home ... Mr. McMahon broke his neck in a fall about 18 months ago and hasn't been able to work, Mr. Bragman said. That health problem, along with the weak housing market and economy, has forced Mr. McMahon into foreclosure proceedings, Mr. Bragman said.
We wish the best to McMahon -- seriously -- but his predicament underscores a new reality in housing: even high net worth borrowers are finding that their cushion, their ability to deal with the unexpected, isn't nearly the sure bet it might have been in the past. In the servicing business, it's usually subprime borrowers that find themselves on foreclosure's doorstep more often than not -- not because they're in over their heads per se, but often because they don't have the excess financials needed to weather a storm when one comes up. This is a group of borrowers that in the traditional sense risks more when they purchase their home. Of course, current market conditions have turned that logic onto its head; subprime borrowers are defaulting for reasons that have nothing to do with divorce, death, and the like -- although those reasons still exist -- and, now, we're seeing even much higher-net worth borrowers falling victim to similar life circumstances. (H/T to Calculated Risk for the pickup)