Con Artists Play Troubling Game: Grand Theft Home

The center's report describes two AARP cases alleging fraud or misrepresentation against District homeowners. AARP lawyers represented the estate of Hattie Mae Smith in a case that took four years to resolve, alleging that Bethesda businessman Rodney Byrd and his Creative Investment Co. violated D.C. consumer protection laws. D.C. Superior Court Judge Joan Zeldon in July 2004 awarded $415,000 in damages to the Smith estate after finding that Byrd "had no intention of helping Smith save her home."

AARP is also working with Hogan & Hartson to represent six older homeowners who are alleging that five D.C. and Maryland residents deceived them into signing away their homes for a fraction of their value. That case, filed in September, is in its deposition phase.

Other possibilities for help include local consumer protection offices, such as the Montgomery County Division of Consumer Affairs. But division chief Eric Friedman said his office is just starting to hear complaints and is working on "getting up to speed" on a tough Maryland law cracking down on scam artists that took effect May 26.

Maryland's new law is considered the toughest among five states with protective laws. The District and Virginia do not have any similar protections.

If a homeowner believes "that there's criminal activity involved, you can go to your local prosecutor," Tripoli said. "That can put a chill on the activity and maybe buy you some time."

But the report notes that state enforcement agencies may not be able to help save the home. And "while most state criminal prosecutors possess a few tools to fight these scams today, they may lack the resources to tackle the scammers and hold them responsible," the report said.

The Maryland law makes scam activity a misdemeanor, subject to three years in jail. To encourage lawyers to take on cases and to discourage scams, it gives those alleging violations the right to file suit privately and to sue for triple damages and legal fees.

It requires that all promises of help be put into written contracts, that any transaction involving transfer of a title be done through a standard settlement form, and that the original homeowner, who has signed a contract to rent and try to buy back later, gets 82 percent of the net proceeds in any subsequent resale of a property within 18 months. The law also helps those facing foreclosure, by giving them more time to figure out what has happened to them.

The National Consumer Law Center report argues that even the Maryland law is not tough enough, and recommends that states ban the activity or regulate more tightly. When a foreclosure rescuer or a partner "buys" a house and the consumer has an option to buy back or lease back, the law should require an accurate assessment of the homeowner's ability to repay, says the report. "Otherwise, these deals are doomed to fail from the outset and the loss of the home is a foregone conclusion."

Wanda Walker, a Fort Washington woman who spoke at the news conference Thursday about losing her home last year, said she still cannot believe what happened. "I'm angry and very disgusted," she said. The lawyer for the man she blames denies that his client is at fault.

Walker said she fell behind on her home payments by about $10,900 after buying an SUV. She said she responded to a flier from RCB Group LLC offering to save her five-bedroom house. "I filled out the loan application and [Robert C. Brown] was to loan me the money and work out the mitigation," she said.

Walker contends that Brown never contacted her original lender and that he then told her, the same week that her ex-husband, a Prince George's County police officer, died in a car accident, that she had signed a quit-claim deed transferring ownership of her five-bedroom duplex. She has argued unsuccessfully in Prince George's County courts that she does not remember signing a quit-claim deed and never intended to sell her house. She has alleged that her signature was copied from the one paper she did sign.