Foreclosures of the Rich and Famous

While the financial woes of Nicholas Cage have been highly publicized (he lost yet another house earlier this week,) the loss of high-end properties by the wealthy have so far appeared to be one-off events. A Madoff foreclosure here. A Marc Dreier Hampton's waterfront mansion there. A Wells Fargo employee throwing parties in another Madoff investor's seized property elsewhere. But really, it's seemed relatively contained compared to the mauling in the subprime market.

As it turns out, high-end real estate is just a lagging indicator. Rich people tend to have more financial resources to fall back on, and it just takes longer for them to exhaust every penny. Take for example, Richard Fuscone, the former head of Merrill Lynch's Latin American investment banking division featured in a WSJ front page article. According to the WSJ's account, Mr. Fuscone retired in 2000 after 21 years at Merrill Lynch in order to pursue personal interests. Such as the pursuit of personal bankruptcy, which took him about ten years to accomplish. Mr. Fuscone declared personal bankruptcy this week in order to forestal foreclosure proceedings on his 18,471 square foot mansion with two pools, 11 bathrooms and a seven car garage. Included in the long list of Mr. Fuscone's creditors is the local pet store along with the tony Greenwich Country Day School. So while we're not sure how much on-the-job money management training Mr. Fuscone acquired while at Merrill Lynch, at least he had his priorities straight. Kids and pets were taken care of until the very end.

Mr. Fuscone finds himself in good company these days, as he is not the only former high-flyer having trouble paying the bills on his enormous mortgage. According to First American CoreLogic's database, which accounts for 80% of the entire mortgage market, 14.8% of the 1,700 mortgages with balances over $4 million are 90 days or more overdue at the end of January. You can expect more high end foreclosures coming to an auction house near you.