If you are a little guy having financial problems, then you are not alone. Even Billionaires are being foreclosed on.
One billionaire real estate developer in Florida had several projects foreclosed on. Another very well known real estate developer is having to re-negotiate mortgages on his investment properties.
Even a woman who was married to a man who was the richest man in the world at one time is being foreclosed on. Here is the story according to Yahoo Finance:
“Article Title: The Rise and Fall of Patricia Kluge
Former billionaire spouse turned vintner is now facing foreclosure.
It’s the kind of story from which movies are made. Sad ones, that is. A beautiful young woman marries a billionaire, divorces and uses her hefty settlement to strike out into a celebrated business, only to lose it all. Rather than a contrived film plot, this is the real-life story of Patricia Kluge.
Last month Kluge, now 62, bid adieu to Albemarle, a beloved Charlottesville, Va., manse. That’s when the 200-acre, 45-room estate became the subject of a foreclosure auction on the courthouse steps in downtown Charlottesville. By its ending, creditor Bank of America had repossessed the property for just $15.3 million.
The sales was just the latest in a string of ups and downs for the former heiress. Raised in Iraq under British rule, Kluge worked early in her career as a nude model for first husband Russell Gay at Knave magazine. On a trip to New York City she met John W. Kluge, the founder of Metromedia. The two were married in 1981. By the time they divorced nine years later, Kluge, the husband, was ranked by Forbes as the world’s richest man, worth more than $5 billion.
Patricia walked away with a paltry settlement by comparison, estimated to have come to less than $1 million a year, plus Albemarle. The 24,000-square-foot neo-Georgian home boasts a helipad, wine grotto, stables and two kitchens. It is nestled in the Virginia countryside near Thomas Jefferson’s Monticello estate.
The seeds of Kluge’s financial downfall were sown in 1999 when, along with third husband William Moses, she established the Kluge Estate Winery and Vineyard on 960 acres near Albemarle. The couple’s plan: Create vintages that would establish Kluge Estate, and subsequently Virginia, as an East Coast mecca for fine wine.
The Kluge Estate Winery quickly won critical acclaim for its bubbly vintages and red-wine blends. Soon Kluge wines were making their way to the dinner tables of society darlings and upscale restaurants. They even graced the menu for Chelsea Clinton’s multimillion-dollar wedding weekend last July.
Perhaps intoxicated by her success, Kluge decided to expand aggressively. Over the past five years she took out $65 million in loans, according to public records. The money went into expanding wine production and building a super-luxury subdivision called Vineyard Estates, which was to include 24 multimillion-dollar homes with pools, outdoor kitchens, tennis courts, horse trails — and even space for private vineyards.
That’s when the housing crisis hit. Vineyard Estates failed to draw buyers. Property values plunged.
In 2009 Kluge put Albemarle up for sale. Sotheby’s International Realty initially listed it for $100 million. The figure was cut to $48 million in early 2010 and then to $24 million, where it sat until February’s bank foreclosure.
Apparently unable to service her debt, Kluge then hired Sotheby’s Auction House to host a two-day estate auction on the Albemarle grounds. Up for sale went personal jewelry, art and furniture that included a Chippendale dressing commode that sold for $338,500 and a Qing Dynasty table clock that fetched $3.8 million. All told, 933 items brought in $15.1 million.
Next went the winery itself. Farm Creditor of Virginia, one of Kluge’s three major lenders, estimates she poured more than $40 million into the business. Despite critical acclaim for her vintages, Kluge appears to have cranked up production to 30,000 cases a year, only to discover that her company could sell less than half that. Kluge and Moses defaulted on almost $35 million in loans. By mid-December Farm Credit had repossessed Kluge Estate Winery and Vineyard after it failed to sell in an auction in which the minimum bid was set at $19 million.
Farm Creditor of Virginia still owns the property and has put a freeze on all operations. The bank plans on April 7 to resell the acreage as six separate tracts in an absolute auction, in which they are sold to the highest bidder with no reserve price. The vineyard’s farm equipment will be sold the following day.
With no buyer turning up for Albemarle, Kluge stopped making payments last year and defaulted on nearly $24 million in loans from Bank of America. She received a foreclosure notice in January, and Bank of America picked mid-February to auction off the estate. The bank took possession when no buyers stepped forward with a bid of more than $15.3 million.
There may be a silver lining for Kluge’s creditors, if not for the former heiress herself. Donald Trump, a longtime friend of Kluge’s, has expressed an interest in taking Albemarle off Bank of America’s repossession roster. He has already bought up the 216-acre front lawn.
“Ultimately we’d like to buy the home, but the bank has an unrealistic expectation for the purchase price,” asserts Jason D. Greenblatt, general counsel for the Trump Organization. “We do have Right of First Refusal on that piece [the Albemarle home], so that if and when the bank finds a buyer, they would have to come to us first to see if we want to take it.”
The Trump Organization also bid in December on Kluge’s winery properties, but its offer was rejected by Farm Credit. Greenblatt says he’s planning to travel to Charlottesville to tour the grounds and discuss buying the Kluge properties from the banks that now own them.
Kluge remains embroiled in the restitution claims and disputes related to the foreclosures, according to a source close to her, who spoke on condition of anonymity. Kluge herself is remaining mum.
Despite their financial troubles, Kluge and Moses continue to live in a home that many would consider palatial. It’s a $3 million Vineyard Estates property they had built on spec back in the days when it seemed as if no real estate deal, or vintage, would ever go sour.”
Kluge did what a lot of Average Joes did. She borrowed lots of money and had a hard time making the payments after the economy tanked.
That is some consolation to the person of lower means who bought a big expensive house. How many people bought a house they could afford when the economy was good, but now that their income has dropped they can’t afford it?
Apparently even the rich did it. Thinking about a short sale?
I can help you short sale your property and never pay the bank another penny. Send me an e-mail at email@example.com. I will contact you for a free consultation.
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When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (312) 953-6725
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Thanks for reading this, Phil Buoscio.
Phil is a Real Estate Agent at Better Living Realty – Buoscio Brokerage, Inc.. Chicago Short Sales Realtor:
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Phil Buoscio specializes in loan modifications and short sales in Chicago Illinois. Chicago Loan Modification Help. Chicago Short Sales. Chicago Short Sale Realtor. Chicago IL Short Sales. Chicago Realtor.
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