Something For Nothing Home Deals

But other people in the local real estate business do want to talk about this organization, though they fear their professional reputations could be tainted if they're quoted by name. Some told me they're trying to wave off friends and relatives who have been invited to join. And some expressed concern that, if they're not careful, they could get into legal trouble if they represent sellers who accept an offer from someone involved in Metro Dream Homes.

One real estate agent in Upper Marlboro shared details of a transaction last September in which she represented the sellers of a three-bedroom house in Bowie. The agent representing the buyer in that deal was McIlwain, the publicity-shy marketing director for Metro Dream Homes. At the time of the transaction, McIlwain was an agent with Century 21 AAA Realty, according to multiple-listing-service records. She now is an agent with Re/Max Colonial Homes in Fort Washington.

It was an unusual home sale. The four-year-old house in the Fairwood neighborhood in Bowie was originally listed at $714,000 in April 2006, according to local multiple-listing-service records. The listing agent said that, after one contract fell through, the sellers lowered their asking price to $689,000. They finally sold in September to a Metro Dream Homes buyer, represented by McIlwain, for $750,000, with the sellers giving a subsidy of $71,225 back to the Dream Homes program. Accounting for that subsidy, the sellers walked away with $678,775 (before real estate commissions). But the buyers took out a new mortgage for the full $750,000. And Metro Dream Homes got $71,225. That's right: The buyers paid more than the asking price, with a 100 percent mortgage and with the extra cash going into the Dream Homes program.

Now, if every home buyer could figure out a way to make numbers perform such feats, there would be no slump in the housing market. Pay more than the asking price; get your loan payments taken off your hands, and have the loan paid off in five to seven years, going halfsies on the equity at that time. How does that work?

"Why did I think this was going to come back to bite me?" the listing agent said when I asked her about the transaction. She said that she felt uncomfortable with the deal and that she couldn't get anyone to fully explain it to her. But the sellers needed to get the house sold, and the unusually large cash-back amount is noted on public records. An appraiser and a lender approved the numbers. And, really, what seller is going to turn down an offer these days?

For buyers, however, there are many layers of risk. The idea that they're paying 10 to 15 percent of the home's value (whether out of pocket, through a refinance or by paying extra for the house) into the program is just the start.

To participate, buyers sign a joint-venture agreement with an entity called POS Dream Homes, according to a copy of that agreement I obtained. The buyer indemnifies Dream Homes if any legal action ensues from a mortgage application related to the deal. And if the buyer discloses any terms of the agreement, the contract says that could be considered a breach of the agreement. That should give participants pause, because if the deal is off, they would probably need to refinance a home that they bought at a premium, and possibly inflated, price.

And, not least, the contract requires participants to become involved in unspecified ways in the profit-making businesses that Metropolitan Grapevine says will raise the money that pays all those mortgages. These include the ATMs mentioned earlier, a Web-based video e-mail operation and a prepaid debit card (marketed on a Web site that does not disclose related fees or terms related to that card), among other ventures.

Next Sunday, I'll look a little more closely at the umbrella group, Metropolitan Grapevine.

E-mail Elizabeth Razzi atrazzie@washpost.com.