Fraud Deemed Factor in Chicago Foreclosures

Mortgage fraud has been a significant factor in the "persistently high level" of foreclosure activity in the Chicago metropolitan area, according to Foreclosures.com, a distressed property investment advisory firm based in Fair Oaks, Calif.Filings to begin foreclosure proceedings in the Chicago area totaled 1,696 in December and 1,486 in January, down from over 2,500 in November but still high in view of strong demand for homes and a continuing economic recovery, the firm reported. Alexis McGee, president of Foreclosures.com, cited a report by Robert Kowalski, a Chicago FBI special agent supervisor, that mortgage fraud is "a growing trend" in the Chicago area. "Property flipping through inflated appraisals and phony loan documents leads to people winding up owing much more than their homes are worth," Ms. McGee said. "At the first sign of financial trouble, they just walk away, and the lender forecloses and takes a loss." Foreclosures.com can be found on the Web at http://www.foreclosures.com.