In case you didn’t check the headlines this morning, Crain’s published an article today about the number of foreclosure lawsuits brought against buyers in American Invsco projects over the past seven years.
According to the story, eight of American Invsco’s downtown towers have accounted for 57.7 percent of all foreclosure cases brought against original buyers in all 76 downtown condo projects of 175 units or more since 2001. (For some perspective, note that Invsco has accounted for 12 percent of the homes sold in big downtown projects over the same period of time.)
Lenders have filed 232 foreclosure complaints in Cook County Circuit Court against original owners of condos in the American Invsco buildings, compared with 170 suits on units in the other 68 buildings in the comparison group, according to the court clerk’s Web site. Expressed as a percentage of the number of condos developed by American Invsco, the rate of foreclosure cases at the developer’s buildings is 8.0%, far above the 0.9% rate for other downtown projects.
Why do American Invsco buildings lead downtown Chicago in foreclosure cases? One explanation may be the role of investors, buyers who intend to flip or rent out their units rather than move in. Though most downtown developers courted investors during the recent condo boom, American Invsco crafted an incentive package with special appeal for investors. Not only did the developer offer to pay condo assessments and property taxes on its units for two or three years, in some cases it promised to pay rent as well, guaranteeing investors a revenue stream to help defray monthly mortgage payments.
American Invsco, which has reviewed the foreclosure-suit data and conducted its own analysis, says in a statement released through its public relations firm that the Crain’s analysis creates “false and misleading impressions.” The statement says American Invsco’s analysis “presents a picture totally different from the one presented by Crain’s.”