More on Metro Money from Editorial Page at the Washington Post
Read this editorial at the Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2007/09/30/AR2007093001215.html
http://www.washingtonpost.com/wp-dyn/content/article/2007/09/30/AR2007093001215.html
Homeowners in Alleged Scam Get Settlement
Payments to 5 D.C. Residents Conclude 3-Year Legal Battle
By Dina ElBoghdady
Washington Post Staff Writer
Monday, January 21, 2008; D01
PRECEDENT
Five D.C. residents who say they were tricked into signing away their homes have reached out-of-court settlements that enabled them to regain ownership and a total of $455,000.
The settlements end a three-year-old lawsuit, a rare happy ending for the growing number of people who claim to be victims of foreclosure rescue scams.
In the suit, the elderly plaintiffs alleged that to stave off foreclosure they signed paperwork for what they thought were loans that would cover missed mortgage payments. Instead, they had signed away their homes to Washington businessman Vincent L. Abell and his associates.
Abell's attorney said his client has not admitted wrongdoing and has agreed to settle for business reasons.
Walter J. Malone, one of the plaintiffs, said he was charmed by Calvin N. Baltimore, one of Abell's associates and a former preacher, because Baltimore seemed to share his religious values.
According to the suit, Malone had considered filing for bankruptcy protection in 2004, after he fell $8,400 behind on the mortgage on the house he bought with his wife in 1994. Baltimore assured him that he could arrange for Malone to continue to live in and own his home in Southeast Washington, the lawsuit alleges. Baltimore allegedly said he would bring Malone's mortgage current. In return, Malone agreed to make monthly payments to the defendants. He had an option to repurchase the home a year later for $215,000. A lawyer representing Baltimore could not be reached for comment.
"The buyback terms were so onerous that there was no way to meet them," said N. Thomas Connally III, a lawyer at Hogan & Hartson, who, with AARP, represented the plaintiffs. "The arrangements were designed to fail from the start, and they allowed Mr. Abell to take ownership of the property by paying the former owner almost nothing."
The monthly payments were often so high that many of the plaintiffs fell behind, lost their buyback option and ended up facing eviction, said Connally, whose firm worked on the case pro bono.
That's when some of them discovered that they had transferred their property titles to Abell, Connally said. Even though they no longer owned the homes, they remained responsible for the mortgages -- which, in Malone's case, had not been paid.
"It was risk-free for Abell," Connally said. "He could get the home and sell it if the property appreciated. He could walk away from it if it depreciated."
Many of the homeowners didn't realize or didn't want to accept that their problems could have been solved if they sold their homes. The plaintiffs each had tens of thousands of dollars in equity in their homes. The amounts due on their mortgages ranged from $8,000 to $16,000.
"Each person was attached to their homes," said Jean Constantine-Davis
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