How The Candidate For California Governor Lost One House And Nearly Lost Another

The conservative talk show host, who has made a career—and a campaign for governor of California—criticizing others’ financial mismanagement, had one Los Angeles home seized by lenders a decade ago and narrowly avoided foreclosure on another. 

Larry Elder, the leading Republican challenger in California’s upcoming gubernatorial recall election, has made his living preaching fiscal responsibility on the nationally syndicated Larry Elder radio show, in four best-selling books and in frequent television appearances since his own show “Moral Court” went off the air in the early 2000s. And he’s made his campaign criticizing the state’s Democratic governor for overspending. 

Meanwhile, little is known about Elder’s own finances—which he has managed to keep hidden, having successfully argued in court that the California law requiring the release of gubernatorial candidates’ tax returns doesn’t apply to recall elections. (California’s financial disclosure rules require candidates only to disclose limited information on certain investments in businesses and real estate located or operating in the state, but do not offer a full picture of a candidates’ holdings.)

Voters will be left to wonder what the public disclosure of Elder’s finances would have revealed. But property records reviewed by Forbes suggest that, on at least two occasions, Elder has succumbed to the same sort of financial mismanagement he derides, including having a $2.4 million home in the Hollywood Hills seized by lenders and sold at auction and narrowly avoiding the same fate for his home nearby, currently worth about $5 million. 

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Elder grew up in South Central Los Angeles and went on to practice law after receiving a J.D. from the University of Michigan. He was discovered in the 1990s by conservative radio talk show host Dennis Prager, who recommended him for a job at ABC Radio Network’s Los Angeles affiliate. As Elder—who has dubbed himself “America’s ‘truth detector’”—says, “The rest is history.”   

According to his website, Elder’s “calling card is ‘we have a country to save,’ and to him this means returning to the bedrock Constitutional principles of limited government and maximum personal responsibility.”

In late 2007, as the housing bubble burst and the Great Recession began, Elder penned an op-ed in the Washington Times, declaring that “no one put a gun to either lenders’ or borrowers’ heads” and arguing that the media had “ignored the consumer’s responsibility for debt.”

But earlier that same year, according to property records, Elder had taken on some sizable debt of his own. In May 2007, he took out a $2.3 million mortgage on a 4,700-square-foot Hollywood Hills home that he had owned for years.

The next month Elder struck another big deal, snapping up a 4,200-square-foot home near the Sunset Strip, with knockout views of the Los Angeles skyline, for $3.6 million. He saddled it with a $2.9 million mortgage at a starting interest rate of 7%, according to Los Angeles County records. 

Both of those loans would soon be in trouble. In late 2009, Los Angeles County records indicate that Elder’s $2.9 million mortgage on the second house was in default. His lender filed a notice, saying it would sell the place to the highest bidder in an auction from the courthouse steps to cover the $3 million he owed by then. The home sold at auction in May 2010 for $2.4 million—well under what Elder’s creditors were owed.

Around that time, Elder was also on the verge of losing the first Hollywood Hills property, a five-bedroom spread with parking for more than 10 cars and an infinity pool overlooking the city. His $2.3 million mortgage was in default, according to county records, and lenders were threatening to sell the home at a public auction to cover the $2.5 million he owed, between his outstanding balance and estimated transaction costs. Elder received two more of these notices in 2012, with his debt climbing to $2.9 million. 

It’s not entirely clear what Elder did to keep hold of the property, but he appears to have resolved the financial troubles in 2014 with the signing of a loan modification agreement, in which he certified that:

“I am experiencing a financial hardship. As a result, (1) I am in default under the Loan Documents or my default is imminent, and (2) I do not have sufficient income or access to sufficient liquid assets to make the monthly mortgage payments now or in the near future.”  

The lenders agreed to rework the deal—granting Elder a $3 million mortgage over 40 years that includes a balloon payment of $920,000 in 2053. Since then, Elder and his creditors appear to be on good terms, according to county records.

“Framed one way, this could make Elder more of an approachable or sympathetic figure that has shared in the struggle of others, but I don’t think that’s the persona he’s projected in this race.”

It’s not all that surprising that so much time passed between 2010 and 2014 without lenders seizing the home or Elder securing refinancing sooner, says Christopher Odinet, a University of Iowa law professor specializing in real estate and mortgage lending and author of the book “Foreclosed: Mortgage Servicing and the Hidden Architecture of Homeownership in America.”

Elder’s dealings took place in the wake of the financial crisis, when more than six million American households lost their homes to foreclosure, according to a 2021 research paper in the Journal of Economic Geography. Loan companies were overwhelmed with foreclosure and loan modification requests and hesitant to process them too quickly, with authorities cracking down on earlier bad behavior. 

“But probably more than that, you’re dealing with a sophisticated and well resourced homeowner who’s going to push back,” says Odinet. “And any attempt to push back at this time with lawyers, demands or promises of refinancing upcoming would probably be more than enough to push off a foreclosure sale.”  

Los Angeles County records show that Elder launched a series of lawsuits against his lenders over the years. Those suits may have helped prolong the foreclosure process until Elder was able to refinance his mortgage. 

Elder’s actions—borrowing heavily as the housing market bubbled, facing defaults after the economy crashed and working with lenders to save his home—mirrored those of many Americans at the time, but they stand in contrast to the image of himself he’s sold to the public.  

“Framed one way, this could make him more of an approachable or sympathetic figure that has shared in the struggle of others, but I don’t think that’s the persona he’s projected in this race,” says Thad Kauser, who chairs the political science department at the University of California, San Diego. “Much like Trump, he’s projected an image of personal success rather than shared struggle, and so revelations like this could puncture this image.” 

Elder has found a footing in the race thanks to his name recognition and positioning as an ultra-conservative protest candidate attractive to voters fed up with California’s progressive Governor Gavin Newsom.

“It raises legitimate questions about his judgement and financial ability,” says Jack Pitney, a political science professor at Claremont McKenna College, of Elder’s mortgage troubles.

“He’s going to get the hardcore, mad as hell, ‘I’m not going to take it anymore’ vote, but he’s not going to get enough of the moderate voters that Republicans need a lot of to win the recall,” predicts Sonoma State political science professor David McCuan.  

The latest FiveThirtyEight polls show Elder as by far the most popular candidate among voters who favor replacing Newsom in the September 14 recall election—though Newsom holds a comfortable lead in current polling, with 55% of the state expected to vote to “keep” him in office compared to only 42% on the “remove” side.

“It raises legitimate questions about his judgement and financial ability,” says Jack Pitney, a political science professor at Claremont McKenna College, of Elder’s mortgage troubles. “But there’s a great deal of overlap between Elder support and Trump support, and if core voters were willing to overlook Trump’s multiple [corporate] bankruptcies, they will probably do the same for Elder.” 

Elder declined Forbes’ interview request for this story, but his communications director, Ying Ma, provided a statement via email.

“The depths to which the media will sink in order to try and find a completely irrelevant story on Mr. Elder during this election is nothing short of astounding,” the statement reads, in part. “We suggest you focus on what inspired 1.7 million Californians to petition for the recall of their governor.”