Foreclosures.com: Mortgage Fraud a Factor in Chicago Foreclosures

SACRAMENTO, Calif.--(BUSINESS WIRE)--Feb. 28, 2005--Foreclosures.com, a California based investment advisory firm specializing in distressed property, suggested today that flipping of properties with inflated appraisals and outright fraud on mortgage lenders was a major factor in the persistently high level of foreclosure activity in the Chicago metro area.

"We saw 1,696 lis pendens filings to start foreclosure in Cook County December of 2004," said Foreclosures.com president Alexis McGee, "and 1,486 in January 2005." Ms. McGee added that the December and January numbers were down from a spike to over 2,500 filings in November of 2004, but still represented a high number in view of the strong demand for homes throughout the Chicago metro region, and the continuing economic recovery.

"In contrast to Cook County," said Ms. McGee, "filings in the surrounding suburban counties were down to 650 for December and 621 for January of this year." She cited a report by Chicago FBI special agent supervisor Robert Kowalski that "mortgage fraud is a growing trend in the Chicago area." According to Assistant U.S. Attorney Kevin Powers, a ring of 20 people operating on the south and southwest side of Chicago skimmed $4.4 million through fraudulent deals before being arrested and convicted in mid 2004.

"Property flipping through inflated appraisals and phony loan documents leads to people winding up owing much more than their homes are worth," said Ms. McGee. "At the first sign of financial trouble, they just walk away, and the lender forecloses and takes a loss."

Foreclosures.com has been tracking foreclosure activity and assisting investors since 1992. In addition to the Chicagoland metro, the company serves markets in all of New Jersey, Phoenix metro, Las Vegas metro, New York metro, and in most major California counties.

"Our mission," said Ms. McGee, "is to help our investor clients' structure win-win scenarios with troubled homeowners so the distressed sellers can conserve some equity for a new start instead of losing everything in a sheriff's sale on the courthouse steps." She went on to say that her firm militates against schemes that result in needless foreclosure, and that, often, their clients help homeowners in default solve their problem and keep their homes.

"There are options available that unsophisticated homeowners don't know about," said Ms. McGee. "We make sure they're aware of them."