Even The Rich Are Being Foreclosed On
This could be good news or bad news, depending on how you look at it. Here is the
good news.
If you are a little guy having financial problems, then you are not alone. Even
Billionaires are being foreclosed on.
Emailing beth@txhomerealty.com to discover how
other sellers successfully did a short sale and avoided foreclosure.
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.
Thinking about a short sale? I can help you short sale your property and get back
on your feet. Send me an e-mail at phillis@txhomerealty.com. I will contact you
for a free consultation.
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 (469) 523-1402.
Discover how other sellers successfully completed a short sale Grand Prairie, Arlington, Ft. Worth, Dallas and request a free
consultation by emailing beth@txhomerealty.com.
Thinking about a loan modification? Our Dallas loan modification kit has the
instructions you will need to get a loan modification approved with your bank.
Email phillis@txhomerealty.com to request a copy.
Thanks for reading this, Phillis Nealy.
Phillis is a Real Estate Agent at The Texas Group.
Phone: (214) 650-5536.
A Realty company with Service as Big as Texas
View My homes for sale at www.southwestdallashomes.com.
Important Notice
Phillis Nealy and The Texas Group Realtors are not affiliated in any way,
shape, or form with the government.
This is not intended as legal, technical, or tax advice. Please speak with a
licensed professional before making any decision. Information is deemed
reliable but not guaranteed as of the date of writing.
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