Actor Nicolas Cage is having foreclosure troubles, mostly due to money lost through bad investment advice and a misplaced belief in real estate values climbing forever. Here is his story — and how you can learn from his mistakes.
On Nov. 13, a New Orleans foreclosure court ruled that actor Nicholas Cage was out and Regions Bank (his lender) was in as the new owner of Cage’s two multi-million-dollar New Orleans properties.
Alabama-based Regions Bank bought the two residences for a song — $4.5 million. That price was significantly below the value of the French Quarter homes formerly owned by Cage. Court records revealed that the French Quarter residence was appraised at $3.5 million (it sold for $2.3 million) and the nearby Garden District home was appraised at $3.3 million, but sold in foreclosure auction for $2.2 million. The outstanding mortgages on both properties was $5.5 million. Regions Bank was the only bidder in the twin auctions.
The actor also has a $6 million IRS lien served against homes he owns in Los Angeles, Las Vegas and Rhode Island. All three properties are currently on the market, the foreclosure proceedings revealed.So how could a Hollywood star find himself in a New Orleans foreclosure court?
The primary reason is that Hollywood actors, like a lot of Americans these days, fancy themselves real estate speculators. Cage bought the New Orleans houses as investments, probably never dreaming that home values would decline, and that, in Cage’s testimony in foreclosure court, his former business manager would make off with millions of dollars.
That so-called perfect storm — a decline in home values and an unexpected cash crunch — led Cage straight into foreclosure court. Sure, when it happens a high-profile guy like Nicolas Cage, headlines all over America amplify the actor’s bad financial practices, as well as his buzzard’s luck on timing his real estate investment purchases.