R. Kelly Takes DEVASTATING Loss on Mansion Auction

3/19/2013 9:28 AM PDT
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This has gotta hurt ... R. Kelly's Illinois mansion was auctioned off Monday for $950,000 -- waaaay less than the $3.5-million-mortgage the singer took out to the build the place.

Kelly built the 20,000-square-foot dream home back in 1997 -- but things took a turn for the worse in 2011 ... when his bank tried to foreclose, claiming he hadn't made mortgage payments for over a year.

Kelly tried selling the crib for $1.6 million to block the foreclosure  -- but no cigar ... it sat for a year. The bank then went full bore on foreclosure ... and it sold Monday for $950k.

The house has 6 bedrooms, 8 baths, an indoor pool, theater room and private lake.

In case you're wondering ... THIS IS NOT the home where R. Kelly may or may not have peed on a girl.