Actor celebrity Brian Austin Green (Former 90210 star and now dating screen siren Megan Fox) is selling his home on a short sale. He purchased the home at the height of the market in 2006 for nearly $2,000,000 borrowing almost the entire purchase amount which created a monthly mortgage payment of nearly $70,000 per month. Can you imagine servicing a debt load of that size? Apparently it was too much for even a superstar to handle. Sources say that the economic recession has hit Green hard and his Rep explained that the house is being sold on a short sale for “strategic investment” reasons.
My previous blog post this week “Embarrassing Short Sale” described how the Mortgage Banker’s Association had to short sale their headquarters in Washington. The point of that article was show that short sales are occurring at every level from people and organizations you would never guess. Well, here’s another example with Brian Austin Green. No one’s immune to the short sale and foreclosure tsunami that is headed straight for us.
The big question you all had with the Mortgage Banker’s Association headquarters short sale was if they would be held responsible for the loss. Great question (and one that thus far no source is revealing). In the case of Brian Austin Green, in California, 1st mortgage purchase loans are non-recourse at the point of origination. I don’t know if Mr. Green refinanced his original purchase loan. If he did, his mortgage would become recourse and therefore, he could be held responsible for the difference. But I doubt he refinanced since his purchase was in 2006. So long as he doesn’t have a 2nd mortgage, if he only short sales his original 1st mortgage, he may be able to walk away with simply a 1099C Forgiveness of Debt form for the loss (as opposed to being held responsible for the difference). Hopefully the Mortgage Forgiveness Debt Relief Act of 2007 will come to his aid so that he doesn’t have a gigantic tax liability.