Woman Says Squatter 'Completely Trashed' House She Was Buying, Just Before Closing; 'It Just Became A Big, Giant Mess'

CHICAGO (CBS) -- Barbecue and booze; someone had quite the celebration at an East Side neighborhood home.

The CBS 2 Morning Insiders learned the partiers are actually squatters, preventing a new mother from moving into her new home.

On a recent cold and windy night, inside a supposedly vacant home, the fireplace was crackling, but no one answered the door.

CBS 2 visited the home a few days earlier with the same result; a cozy fire burning, but not a soul in sight.

"It was supposed to be my family's fireplace," said the woman who was hours away from signing the final paperwork to become the owner of the house before finding out a squatter had trashed the place.

The new mother, who asked to remain anonymous, had an eerie encounter at her final walkthrough at the house late last year, when she arrived to find someone already holed up inside.

"We're like, 'Okay, well maybe this person is fixing it, or maybe he's just for security issues,'" she said. "I'm like, 'What's going on?' He's like, 'Can I help you?' I'm like, 'Yeah, we're supposed to buy this house.' And he's like, 'Well, I just leased this house last week, get off my property.'"

Real estate attorneys scrambled over email.

There wasn't supposed to be a renter inside the home. The man living inside was a squatter; a comfortable and confident squatter who installed security cameras and a "no trespassing" sign.

"I have a lot of friends and family in this neighborhood, like, 'Oh yeah, we drove right by, and he has a Christmas tree up. He even has presents,'" the buyer said.

Neighbors said they had been looking forward to having someone move into the vacant house. They soon learned the so-called renter was a fraud, who liked to party.

"There was a lot of noise, people were fighting on our sidewalks," one neighbor said.

"The neighbors are very mad. The cops are upset. They're definitely putting a strain on the neighborhood," the buyer said.

To get him out, the man either had to be evicted through the courts, or enticed with money. He eventually accepted cash for keys and moved out.

"We come back, we do another walkthrough, we find damage to the property. All the walls are dirty. The floor's scuffed. The kitchen is filthy," the buyer said. "All the carpets are dirty, there's holes in the living room wall. I'm just like, 'Okay, they just completely trashed this place.'"

That meant more negotiating with the sellers for repairs, but at least the squatter and his friends were gone, or so everyone thought. Instead, neighbors told her the squatter had broken into the house again, and was throwing another party.

"It was alcohol bottles everywhere; upstairs, downstairs, shot glasses; they did not spare on alcohol whatsoever. They got brand new chairs and tables," the buyer said.

This time, the squatter ran away when police showed up.

How did the squatter get in after the locks were changed? How did he get inside in the first place? Don't banks secure their foreclosed homes?

The house is deeded to LSF9 Master Participation Trust, which appears to be part of mega private equity firm Lone Star Funds, which boasts $85 billion in capital commitments. U.S. Bank is the trustee.

"This is supposed to be our first home," the buyer said. "It just became a big, giant mess."

Who dropped the ball?

The buyer still wants the home and hopes to close next week. U.S. Bank clarified its role in the deal does not involve maintenance of the property.

Lone Star Funds said in a statement, "We recognize the importance of home security. We take all appropriate and reasonable steps to secure the properties we own."

But when pressed, Lone Star Funds would not tell us what kind of security measures they take in general. Lone Star Funds also declined to provide specifics in this case.