Hearst Heiress Loses Estate in Foreclosure. If It Can Happen to Her…

Veronica Hearst—widow of Randolph Apperson Hearst, the son of the famous newspaper magnate William Randolph Hearst—moved a little farther out of debt February 25, when her 52-room Villa Venezia estate was sold for $22 million at a foreclosure auction in Palm Beach County, FL. 

The couple had bought the ocean front property, located just south of Palm Beach, in 2000 for $29.9 million. But Randolph died of a stroke just a few months later at the age of 85, leaving Veronica with not only a broken heart, but $375,000 in yearly property taxes and $44,000 in annual utility bills, among other expenses. In fact, court papers show the socialite was paying $290,000 a year in interest on loans used to cover her bills.

This week New Stream Capital, specialty finance company, snapped up the pad for $22 million at auction, a discount on the $27 million price the manse was listed for last year. But Hearst isn’t in the clear just yet. She reportedly owed New Stream Capital some $45 million in loans before the sale and has also had mortgaged portions of her art collection to make paybacks. 

Unfortunately, we all can’t refinance our personal treasures, or sell our extra homes, to pay off debt. In fact, more than half a million people declared bankruptcy in 2007. That number could well increase this year. “With over one million more subprime adjustable-rate mortgages due to reset during 2008, the payment shock for many households could lead to higher bankruptcies this year,” says Samuel J. Gerdano, executive director of the American Bankruptcy Institute. Declaring bankruptcy is not necessarily a death sentence for your credit. But bouncing back and repairing your credit score requires time and diligence.