For some time now, I have been warning about the mortgage crisis and its impact on P2P loans. The fact that Ed Mcmahon, Johnny Carson’s former sidekick, is in default on his home mortgage shows just how screwed up some Americans were in their thinking about debt, the housing market, and personal finances. Ed Mcmahon went on Larry King live to describe his debt problems.

Fame helps because Donald Trump in a reported act of kindness is saving Ed Mcmahon from his mortgage problems. It is kind of Donald to save Mcmahon’s house, but Ed should have never let himself arrive to this situation in the first place.

Ed Mcmahon is in default on his $4.8 million in mortgage loan with Countrywide on his 7,000 square-foot, six-bedroom Beverly Hills, California home. He bought the house in 1990, so he should have significant equity in the home by now. I can only suppose that he took out a second mortgage against the property.

But why can’t Ed Mcmahon pay his mortgage debt?

McMahon, 85, … has not worked for about 18 months because of a neck injury.

Ed Mcmahon made the major mistake of counting on both his income and health to hold out until well into his 80s. He did not have enough of a passive income to even cover his shelter! Mcmahon showed terrible judgment by not considering anything but the most optimistic combination of scenarios for real estate, income, and health. I know other Americans did the same, but Mcmahon should have advisers who could have better directed him.

I hope to have my house paid off long before retirement let alone age 85. It is simply smart to have a rent free place to live through the end of your days on earth.

Also, I am not so certain that Donald Trump is acting out of compassion. It is quite possible that he is waiting on the aging Mcmahon to kick the bucket and the real estate market to rebound.

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