Will Grammy-winner R. Kelly
become the poster boy for celebrity strategic defaulters?
Kelly is facing a $2.9 million foreclosure
on his suburban Chicago mansion
, reports The Associated Press
. He apparently hasn't made a mortgage
payment for more than a year and owes $2.9 million plus unpaid interest. And yet his spokesman, Allan Mayer, insisted to the news service that his client "isn't in financial trouble."
So what's up with that? Perhaps the singer is joining the ranks of those who make a conscious business decision to walk away from a loan because the property is no longer a good investment. If that's the case, he may be the first public figure to thumb his nose at the bank.
In the past dozen months (despite lenders hoping you'll believe otherwise) it's become way more socially acceptable to become a strategic defaulter
-- someone who walks away on a mortgage
obligation simply because the property is no longer worth what they owe on it, not because they can't afford the payments. The guy you meet at the cocktail party who tells you that he mailed the keys to the bank on his home "rather than throw good money after bad" is congratulated on his business acumen and his courage to stare down the Big Bank. Fear of a bad credit
rating? Puh-lease. Good credit
may just have become a luxury many can no longer afford -- or care about.
In May, Fannie Mae
reported that nearly twice as many underwater homeowners thought it was OK to walk away from a home loan for economic reasons.
Mind you, we don't know what's behind Kelly's decision to have stopped his monthly mortgage payment of $24,345 in June 2010, but it's clear that his career is strong and he just concluded a successful tour. JPMorgan Chase Bank
filed the foreclosure
lawsuit last month in Cook County Circuit Court, stating that the current principal balance on his loan was more than $2.9 million, not including unpaid interest, which accrues at a rate of $251 a day. The singer's original loan on his 11,000-square-foot home in Olympia Fields, in south suburban Chicago, was issued in 1999 for $3.5 million.
Reuters reported that the property also has a number of liens on it, including nearly $2 million owed to the Department of the Treasury.
Only time will tell whether the 44-year-old R&B star, who won three Grammy Awards in 1998 for his song "I Believe I Can Fly," becomes the face of the strategic default movement -- or just joins the ranks of celebrities who lived above their means until the piper came calling.
Also see: Singer Carnie Wilson Could Lose House to Foreclosure and more celebrity real estate.
See homes for sale in Olympia Fields, Ill., at AOL Real Estate.
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