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McMahon, 85, appeared with his wife, Pamela. The couple said they are $644,000 behind on their mortgage payments and are in negotiations with lender Countrywide Home Loans Inc. to set a foreclosure date.
McMahon, in a neck brace, said he had stopped working since he broke his neck in a fall 18 months ago. He didn't elaborate.
McMahon, who was Johnny Carson's sidekick on the "Tonight" show, said the house had been on the market for two years and that although 50 organizations or individuals had looked at it, no one had made an offer. Documents show McMahon has a $4.8 million mortgage on the home.
"It's like a perfect storm," he said. "Economy problems. Selling the house right now is a tremendous operation."
McMahon bought the six-bedroom, five-bathroom, 7,000-square-foot house in January 1990. The mansion, which is listed at $6.25 million, is in a gated hilltop section off Mulholland Drive called The Summit. Britney Spears is among his neighbors.
Asked why a millionaire couldn't make house payments, Pamela McMahon said the couple had less money than people may think and suggested they could have done a better job managing their finances.
"We didn't keep our eye on the ball. We made mistakes," she said. "It's embarrassing to say the least, and it's sad, because you know, Ed's worked his whole entire life."
McMahon, a former pitchman for the American Family Publishers' sweepstakes and former "Star Search" host, received a $7.2 million settlement after a toxic mold spread through his house and led to the death of their dog in 2001.
With legal fees and construction costs of fixing the mold problem, the money did not go far, McMahon said.
"We had nine lawyers, they had nine lawyers," McMahon said. "By the time that's all over, and you rebuild the house from the outside in. ... A lot of things went wrong."
Still, McMahon said he was hopeful. He said there has been renewed interest in the house this week.
"I'm optimistic," he said.