"What's driving foreclosures out here is negative equity, as much, or more so than job loss or anything else," O'Toole said. "We put an awful lot of home owners from '05 to '07 in homes almost double what they were worth. You have a lot of folks out here living in million-dollar homes that are living above their means."
The mortgage crisis doesn't discriminate. Earlier this year, Oscar-winning actor Nicolas Cage's English Tudor mansion in Bel-Air – once owned by Dean Martin and Tom Jones – was put up for sale by the lender, Citibank. Once listed at $35 million, the nearly 12,000-square-foot estate is selling for $11.8 million, according to Redfin.
"The key thing is just because you bought a million-dollar house doesn't mean you're rich," Green said. "There are people who are rich who are just walking away and saying, 'Screw you,' and then there are those who weren't rich who got into a million-dollar house they shouldn't have bought in the first place."
Another luxury lender-owned property up for sale is the Thousand Oaks, Calif., mansion owned by former Phillies and Mets star Lenny Dykstra, who filed for bankruptcy last year. The ex-ballplayer has now launched a new company – predatorylendingrecovery.com – to help struggling homeowners stay in their houses, according to the website.
Dykstra, who after baseball found fame as an investment guru, has claimed that Washington Mutual, which J.P. Morgan purchased in 2008, put him into a $12 million loan he couldn't afford in the $17.5 million purchase of hockey legend Wayne Gretzky's mansion. The bank has denied wrongdoing.
"Even multi-millionaires can make mistakes," Dykstra said on the website.
The real-life drama of foreclosure has even touched the well-heeled personalities of the Housewives reality-TV shows.
Last Spring, Orange County's Tamra Barney dealt away her Tuscan-style house in a short sale. The 4,300-square-foot Ladera Ranch went for $1.12 million, down from the original $1.6 million asking price. In a short sale, the lender agrees to a price less than what is owed in order to help troubled owners avoid foreclosure.
Fellow Housewives cast member Jeana Keough earlier used a loan modification earlier this year to avoid foreclosure on her seven-bedroom, nine-bathroom home.
After defaulting on a $4.7 million loan for their 6,600-square-foot Newport Beach home, Jim and Alexis Bellino, also of "Real Housewives of Orange County" fame, have received a loan modification from Chase Bank to avoid foreclosure.
Jim Bellino said he paid $5.8 million for the home in 2007, at the height of the real-estate frenzy; He owed $4.7 million. "I put a million-two down on my house," he said. "It wasn't 100 percent financed. It wasn't a frivolous decision. Listen, we all got caught."
He insisted that the decision to stop making mortgage payments was pure business.
"It doesn't have anything to do with being financially ruined, which people assume when you're not making payments," Bellino said. "It has to do with a decision to not throw good money after bad."