Judge Rules Against Foreclosure Rescuer

Investor Ordered to Pay Widow's Estate

Hattie Mae Smith was 70 and seriously ill when businessman Rodney Byrd first visited her Northwest Washington home. She was facing foreclosure on the house she had lived in for 25 years.

The bedridden Smith, a retired post office supervisor, turned to Byrd and his Creative Investment Co. for a rescue. Within months, one of Byrd's partnerships wound up owning the home and reselling it for a profit -- and Smith was threatened with eviction.

Smith died in 2002, but not before getting legal help and filing a lawsuit against Byrd. Last week, a judge in D.C. Superior Court awarded her estate $415,000 in damages after finding that Byrd had no intention of helping Smith save her home and that his actions violated D.C. consumer protection laws.

Judge Joan Zeldon issued an opinion that called Byrd's conduct "outrageous." She wrote that Smith was not the first victim of his business dealings, and expressed hope in her ruling that the judgment will "deter Byrd from acquiring the homes of other frail and vulnerable people by illegal means."

Byrd, 37, who advertises himself as a foreclosure rescue specialist and property investor, denied wrongdoing and plans to appeal. In an interview last week, he disputed the allegations made against him in court and defended his business practices, adding, "I didn't force anyone to sign anything."

The AARP's Legal Counsel for the Elderly, which represented Smith and her family, has had clients prevail against Byrd in three other cases, according to AARP lawyers and court records. The other cases also involved people facing foreclosure who said that Byrd failed to help them, the records showed.

AARP lawyers said they fear the case is only one example of a bustling "foreclosure rescue scam" business in the Washington area and other cities where housing prices have skyrocketed.

"There are many low-income elderly residents living in valuable properties that are increasingly being targeted by unscrupulous con artists," said James T. Sugarman, a lawyer with AARP.

Sugarman urged property owners to be cautious in dealing with businesses that offer to rescue them from foreclosure. Those facing foreclosure, particularly over small amounts, can often renegotiate their loans or sell the properties for more than they owe, he said.

A banner outside Byrd's Tenleytown office promotes his services in stopping foreclosures and buying houses. His company circulates fliers to those facing foreclosure, following up on legal notices.

A recent flier, for example, says that the company offers "a number of creative programs that will allow you to keep your home." It adds: "You must act now, before someone else owns your home. Rest assured, The Creative Investment Company is here to help you."

Zeldon heard evidence about Smith's experience with Byrd during a trial in January and recapped the details in a pair of opinions issued later. In May, Zeldon held Byrd liable for damages. Then, last week, she set the amount.

When Smith got a flier in late 1999, the widow had about $150,000 equity in her house. Yet she had fallen about $2,300 behind on a $12,300 mortgage for her two-story brick rowhouse in the 1400 block of Monroe Street NW, in Columbia Heights, Zeldon wrote. She was current on a $38,000 mortgage. Several foreclosure sale notices for the house had been published.

Smith had been hospitalized with serious circulatory problems for a month that fall, Zeldon wrote. Her doctor told the court that Smith had periods of confusion during the hospital stay and that she was emaciated. She was released in November 1999 to a bedroom in her home equipped with a wheelchair and hospital bed.