Today, Rosa Davis is a lucky Baltimorean.  A caretaker of eight grandchildren, she was a victim of an alleged illegal real estate scam.  But when a group of local real estate investors learned of her situation, they turned the tables and helped Ms. Davis turn a profit.

   Walking through her Cliftwood Avenue home, Ms. Davis explains how it came to pass that she paid $52,000 for the two story dwelling after the seller paid only $5,000 four months prior.  Unemployed and without credit, she was in no financial position to purchase real estate.  "The seller said he could help me; he took me in his car to the bank," she explains.  He opened a checking account in her name and deposited funds so the bank would believe she had purchase money.  He orchestrated an appraisal much higher than the property’s actual value, and doctored documents to secure her mortgage.  Ms. Davis thought she was stepping into a better lifestyle.

   Instead, she was stepping into a financial disaster.  The property was in poor condition.  Ms. Davis says the seller, operating under an limited liability company, promised to install kitchen cabinets, fix the damaged floors, and repair the leaking pipes—all of which never happened.  The seller promised to help her buy her first home, but like the Trojan horse what seemed like the gift of homeownership turned out to be a con in disguise.

   With her chronic lung condition, Ms. Davis already carries more than her share.  Of her two daughters, one is incarcerated and the other is deceased.  She dedicates her fixed income to supporting her eight grandchildren and trying to keep the mortgage payments current.  But there is not enough money to pay everything; and the leaking pipes are responsible for water bills of more than $1,000.  It wasn't long before the bank scheduled the property for foreclosure.  The reality of the situation had set in, but luckily for Mrs. Davis an angel was just around the corner.

   The angel was an enthusiastic, fair-haired real estate investor named Barbara Klaput, who happended to be learning about foreclosures at Investors United School of Real Estate.  Located in Baltimore, the school is the first school in the nation specializing in investment real estate education.  As part of her homework, Mrs. Klaput was contacting property owners in the 21213 zip code to "farm" for potential sellers.  When she called Mrs. Davis, Mrs. Klaput recognized the alleged fraud and saw an opportunity to help someone in need.

   Guided by her Investors United instructors, she tracked down the lender, informed them of the alleged fraud, then she forced them to stop the foreclosure and reduce the loan balance from $49,000 to $4,000!  Further, Klaput and other members of Investors United paid the $4,000 balance giving Mrs. Davis a free and clear deed with no debt attached.

   "I want people to know that I am part of a group of real estate investors who practice integrity, and who value our reputation.  Let this be a warning to unscrupulous real estate con-men that we'll expose your scams, and bring you to justice," said Klaput.  When asked about their goodwill project, Investors United CEO Charles Parrish explained, "We are a people business.  It’s okay to make a profit, as long as you treat others ethically and honestly.  An honorable reputation is everything."

   This was a story of goodwill and good business.  With the recent wave of flipping, fraud, and misrepresentation, local real estate investors have been given a generally negative image.  But the tide is changing.  Both Attorney General Joseph Curran and Senator Barbara Mikulski have dedicated special efforts to bringing an end to real estate fraud.  Combined with help from the members of Investors United, the image of local real estate investors is being restored.  Currently, the Banking Commission, and the Attorney General, have been informed of Ms. Davis’ case against the seller and are taking appropriate action.

   Notwithstanding, fraud, misrepresentation, scams and otherwise inequitable transactions are still common threats in the real estate industry.  Due to their lack of real estate knowledge, buyers, sellers, borrowers and even lenders may be at risk for serious financial losses.

   As in most important endeavors, knowledge is the key to making wise real estate decisions.  Before making the decision to purchase or sell, one should always compare property values listed in the public record to ensure a fair price.  Before ratifying anything, a real estate attorney should be hired to review the contract.  Regarding financing, both borrowers and lenders should shop around to compare terms.  Even fees charged by title companies can be compared by asking for an estimated settlement statement called a HUD-1.  Most importantly, buyers should only give a deposit to a reputable title company—never to the seller directly.

   If you suspect real estate fraud, please do your part to keep the industry honest.  Call the Office of the Attorney General and the Banking Commission for assistance in making a formal complaint.
 

  "This was a story of goodwill and good business"