A lavishly renovated Lake Forest home atop a bluff overlooking Lake Michigan, formerly priced at $11.495 million, is the subject of a May 5th “foreclosure pending” filing by its bank. But the home’s developer says that he may yet sell the property before any foreclosure suit can move ahead.

The house was originally a flat-roofed contemporary from 1966, but when I wrote about it in April 2007, Milestone Development was completing its transformation into an 8,700-square-foot French-style chateau. New features included a tower, two master suites with expansive views of the lake, a 1,500-bottle wine cellar, and lots of millwork and other luxurious finishes. The house and pool occupy more than two acres on a secluded street in south Lake Forest; its Lake Michigan beach is 180 feet wide.

Milestone bought the property, at 277 Bluffs Edge, for $5.325 million before undertaking the renovation. From the April 2007 asking price of $11.495 million, the price has come down in several steps to $7.995 million. It is listed with Jean Anderson of Koenig & Strey GMAC in Lake Forest; she was not the agent when the house was listed for more than $11 million.

On May 5th, Bank of Lincolnwood filed a lis pendens on the property with the Lake County Recorder of Deeds. (A lis pendens—literally “suit pending”—announces a lender’s intention to research and begin foreclosure on a property.) The document does not say why the filer is looking at foreclosure. Several months or more can elapse before a lis pendens becomes a full-blown foreclosure.

Milestone’s principal, Don Zordani, says that the lis pendens filing “was premature. We now have a contract [that] probably closes in 30 days. We’ve been working on this sale for six months.” Bank of Lincolnwood, he says, was aware of the pending contract, “but they reported it’s in pre-foreclosure.” Zordani would not disclose the agreed-upon purchase price in the contract, nor would Anderson. In late April, U.S. and Illinois regulators ordered Bank of Lincolnwood to reform its lending practices.

On April 23rd, a nearby home that was also developed by Milestone was sold at a sheriff’s auction. It had previously been priced at $4.495 million, but the price had dropped to $4.195 million by the time of the auction. The sheriff’s auction document filed with the Lake County Recorder does not indicate the sale price. Anderson says that the buyer now has the house back on the market for $3.9 million.