Former Major League Baseball star Jose Canseco is walking away from his mortgage. His $2.5 million Encino mansion has been foreclosed after Canseco stopped making monthly mortgage payments.
Canseco granted the syndicated TV show “Inside Edition” an interview, in which he stated his reasons for walking away from the mortgage. Although he once earned $6 million in his best year, and earned a total of $35 million over the years, he has lost most of it. Canseco cited taxes of 41% and a couple of divorces as reasons for reducing his share of income.
Canseco stated “I do have a judgment on my home and it to me is very strange because it didn’t make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else.” He mentioned that his finances were very complicated, and that 2 books and a possible movie might help him rebound.
Canseco’s case is very different from most ordinary homeowners that are facing foreclosure. However, his reasoning is similar. Many homeowners are finding that they do not want to continue making payments on their homes.
This is especially true of homeowners with little or no equity, or if they owe more than the property is worth. Canseco did not indicate how much equity he had in the home.
People are finding that they do not like the terms of their mortgages, or that they might be better off if they abandon the property. In many cases, homes have devalued by over $100,000 in just a couple of years following a few years of double-digit percentage growth.
Lenders that signed off on loans using stated income or otherwise did not exercise due diligence in granting the loans are now getting pinched by homeowners that are leaving them holding a property worth 80% of the loan balance or less. Mortgage giants are still reporting quarterly losses in the billions of dollars due to mortgage losses, and not all of those are subprime.
Tags: Foreclosure, jose canseco