R. Kelly mansion loss at foreclosure auction tops $4 million

r kelly pic

Three-time Grammy Award-winner R. Kelly might today be singing the blues.

That’s because the super successful R&B singer, songwriter and record producer took a bath on his custom-built 16-room gated mansion, forfeiting it back to the lender, J.P. Morgan Chase, at a recent Cook County, Ill., foreclosure auction for a modest $950,000.

Kelly paid $1.5 million for the property in the late 1990s; however, he razed the existing structure, took out a $3.5 million mortgage and erected the current 22,000 sq. ft. estate. The suburban Chicago home sits on three acres with a private lake, featuring “six bedrooms, eight full bathrooms, six half-baths, an indoor pool and theater,” according to SunTimes.com.

This is not the first sign of financial trouble for the “I Believe I Can Fly” crooner, who reportedly owed the Internal Revenue Service (IRS) nearly $5 million in unpaid taxes as of 2012.

J.P. Morgan will likely re-list and market Kelly’s former home as soon as possible, hoping to recoup the $2.9 million that is still owed on the original mortgage note.

Photo via Wiki Creative Commons Use license.

Top 10 Most Searched Foreclosure Cities In The U.S.

Where are all the foreclosures?

Well, in today’s market, foreclosed homes are located in just about every corner of the United States. Long gone are the days when distressed real estate was hard-to-find, valuable treasure. Make no mistake, foreclosures, short sales and other distressed property types are typically still cheaper than their traditional counterparts; however, thanks to the mortgage meltdown a few years back and the current nationwide economic crisis, they are significantly more abundant.

In fact, there are so many foreclosures in some “hot spots” that banks and lenders don’t have the time or resources to repossess them in a timely fashion. That’s the reason some folks can live in their homes mortgage-free for months or even years, as well as the reason for the “shadow” inventory — abandoned/vacant homes not yet “in the system” — that sits idle for so long.

Indeed, foreclosures are essentially everywhere. And until the lenders and banks catch up, or until the economy levels out, or both, foreclosures will continue to remain everywhere well into the near future.

The good news is that foreclosed homes represent discounted real estate purchase opportunities. Banks and lenders are overwhelmed and are often eager to sell their assets as quickly as possible, even if it means slashing prices by as much as 50 percent or more. Always remember: Banks and lenders are in the money business, not the real estate business.

Cash is king.

So, since we’ve established that foreclosures are everywhere and that they still offer buyers and investors tremendous value — especially when you factor in historically low mortgage interest rates — we thought that we’d take a look at the most popular areas for foreclosure searches throughout the nation.

Just because there are more foreclosures on the market and unemployment is high, doesn’t mean that competition among buyers doesn’t exist. On the contrary, competition is stiff in desirable locations nationwide. In fact, it’s common for forward-thinking investors and others to cherry-pick the best deals, renovate and rent/re-sell them for profit.

It’s the primary reason Government-Sponsored Enterprises (GSEs) like Fannie Mae have had to implement programs such as “First Look,” which locks out investors from purchasing properties for a few days so first-time buyers don’t miss out on all the great opportunities.

In any case, here are the Top 10 most-searched cities for foreclosed homes for sale*:

  1. Los Angeles, Calif.
  2. Orlando. Fla.
  3. Fort Lauderdale. Fla.
  4. Miami, Fla.
  5. Houston, Texas
  6. Atlanta, Ga.
  7. West Palm Beach, Fla.
  8. Dallas, Texas
  9. Chicago, Ill.
  10. Las Vegas, Nevada
foreclosures

Florida, with four cities in the list, is clearly a major point of interest for many buyers and investors. That’s not too surprising, considering the climate and reputation for being a retirement and/or vacation home destination. In addition, the “Sunshine State” took a beating when the housing market crashed — it has consistently remained at or near the top of the collective foreclosure list since it tanked.

Even still, homeowners who paid too much at the height of the market are still struggling to get their heads “above water” on mortgages that simply no longer make sense (or cents).

It’s also no surprise that Los Angeles, where the population density is high and the real estate footprint is perhaps just as dense, sits atop the list. Houston, Atlanta, Chicago and Las Vegas are also in demand, indicating that if buyers and investors are interested in investing in these areas that they better be prepared and on top of their games.

Searching and finding foreclosures is clearly a small piece of a very competitive pie in many areas throughout the United States. It’s the first, albeit perhaps most important, step in a process that could mean the difference between making (or saving) tens of — if not hundreds of — thousands of dollars.

The best thing that you can do to improve your chances of success is to do your homework, know your target market inside-out. This way, you can identify a deal the moment you see it and are able to move fast to ensure that no one else beats you to the punch.

Timing is everything even when foreclosures are everywhere.

*Foreclosure data provided by Foreclosure.com

Michael Jordan’s Attack Athletics Investment In Chicago Facing Foreclosure

MJ golf course

There are scores of professional athletes, past and present, who have squandered millions of dollars in bad investments. At this point and alarming rate, the unofficial tally could extend into the billions.

Michael Jordan, the greatest player to ever grace the court of the National Basketball Association (NBA), is on the verge of adding his name to the long and undistinguished list, according to the Chicago Tribune.

“His Airness” is in jeopardy of losing a $1.5 million cash investment in Attack Athletics Gym, which is a 65,000 sq. ft. facility on Chicago’s West Side that “features four full-sized basketball courts, a 10,000 sq. ft. weight room and a client roster filled with current and former NBA stars, including Dwyane Wade, Scottie Pippen and Luol Deng.”

Tim Grover, the owner and Jordan’s trainer during his NBA heyday, owes more than $12.2 million to creditors. The bank that loaned Grover the money to build the gym filed a $10.2 million foreclosure judgement earlier this year when he failed to make payments. He then filed for Chapter 11 bankruptcy to stave of foreclosure; however, the case was dismissed by a judge last month, which opens the door for the lender to once again seek foreclosure on the property.

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Bulk REO sales: Fannie Mae to sell foreclosed homes to investors to use as rentals

Federal Housing Finance Agency (FHFA), which oversees mortgage-backing giants such as Fannie Mae and Freddie Mac, today announced a pilot program that targets real estate investors in Atlanta, Ga., Chicago, Ill., Las Vegas, Nevada, Los Angeles, Calif., Phoenix, Ariz., and areas of Florida.

Bloomberg.com reports that about 2,500 of Fannie Mae’s Real Estate-Owned (REO) homes, which are essentially foreclosure properties, will be marketed in these hot spots and offered to investors — who will agree to be “equity partners” — to buy in bulk. It is a program that is designed to “reduce taxpayer losses, stabilize neighborhoods and home values, shift to more private management of properties, and reduce the supply of REO properties in the marketplace,” according to FHFA Acting Director Edward J. DeMarco.

Real estate investors were encouraged to participate in the Bulk REO sales program — one that allows investors and public entities to purchase multiple Fannie Mae properties in one transaction — earlier this month. However, not only must they demonstrate that the have the financial ability to buy the portfolios, but they must also be able to manage the properties post-purchase. Once approved, investors will gain access to various portfolio details, as well as be provided with bidding instructions.

Freddie Mac is currently considering whether or not to follow in Fannie Mae’s forward-thinking footsteps.

For more details on the Fannie Mae bulk-sales pilot program click here.

R. Kelly facing $2.9 million foreclosure suit on house in Chicago suburb

Three-time Grammy Award-winning singer-songwriter R. Kelly has not paid the mortgage on his 11,140 sq. ft. mansion in Olympia Fields, Ill., in more than one year, according to ChicagoRealEstateDaily.com.

As a result, J.P. Morgan Chase has filed a foreclosure notice on the luxurious two-story home, which “sits behind an imposing gate on a 3.7-acre site” and “features six full bathrooms, seven half-baths and a four-car garage,” among many other amenities.

Kelly, who purchased the south suburban Chicago estate more than a decade ago, has to get current on the $2.9 million outstanding balance or risk having it repossessed by the lender. Its current appraised value is estimated to be $3.5 million.

The report indicates that Kelly has not lived at the home for more than a year and made a deliberate “strategic default’ decision, hoping to trigger a loan modification by defaulting on the loan. It doesn’t appear, at least for now, that a loan modification is in the works for the “I Believe I Can Fly” crooner.

Throughout his career, Kelly has amassed an impressive library of hits as a singer, as well as a record producer. He should be, by no means, strapped for cash. However, the 44-year-old has also had high-profile legal battles along the way, including several charges of child pornography.

Then again, perhaps he’s just not interested in throwing good money after bad on a home that he no longer wants.