District Sues Mortgage Company Based in Prince George's County

Goal Is to Help Clients Retain Equity and Homes

D.C. Attorney General Linda Singer said she is trying to keep 27 people from losing their homes. (Gerald Martineau - The Washington Post)

The D.C. attorney general filed a lawsuit yesterday against Metropolitan Money Store Corp., hoping to recover lost home equity and prevent foreclosure for city residents who dealt with the Prince George's County-based mortgage company.

The complaint, which seeks restitution and damages, is the first filed by a legal agency against Metropolitan and its owners, who are under a federal mortgage fraud investigation.

"We have the evidence to make the case," Attorney General Linda Singer said in an interview yesterday. "Once we have proof, we're going to move forward."

Singer said she was driven to file the lawsuit to keep at least 27 District residents from losing their homes. Investigators say Metropolitan promised to rescue homeowners from foreclosure but instead drained the equity from clients' homes. "We think it's an outrage," Singer said.

In Annapolis yesterday, state lawmakers and officials vowed to introduce legislation that would address such foreclosure rescue operations and, more broadly, help residents at risk of losing their homes. The state's foreclosure rate has climbed 345 percent in the past year, and Maryland ranks 16th in the nation in foreclosures, up from 40th last year, according to statistics presented to the state Senate Finance Committee.

The D.C. complaint names as defendants Metropolitan, Joy Jackson and 11 others, including Jackson's husband, Kurt Fordham.

The defendants "unjustly enriched themselves by participating in a scheme that used misrepresentations and unconscionably high fees" to strip equity from the homes of District residents, according to the suit.

Jackson and Fordham, who were featured in a Washington Post article Sunday, have not responded to repeated requests for comment; efforts to locate them have not been successful.

The District suit seeks to keep the homeowners from going into foreclosure, to void the contract between the homeowner and the defendants, to order the defendants to pay restitution and to require the defendants to pay civil penalties up to $1,000 for each violation of the District's Consumer Protection Procedures Act.

The attorney general's office began investigating Metropolitan in May, officials said. The FBI and the Secret Service have also begun fraud investigations into the company's dealings.

A class-action lawsuit was filed in federal court last month on behalf of as many as 400 homeowners in Maryland, the District and Virginia who say they have lost $60 million in equity through Metropolitan.

Metropolitan operated a foreclosure rescue program that targeted homeowners with at least $100,000 in equity.

Investors would essentially get $10,000 and take ownership of homes that were about to go into foreclosure. The homeowners were told they could live rent-free for a year and buy back their houses at the end of the year.

But when the homes passed to the "straw buyer," Metropolitan would borrow as much as possible against the value, effectively siphoning the equity and increasing the cost of the home, according to the suit.

Labor Secretary Thomas E. Perez, who is chairman of the Maryland Homeownership Preservation Task Force, said foreclosures will be a "top priority" in the next legislative session. "People are calling, asking what can be done," he said.

Perez said he will suggest legislation to toughen penalties for mortgage fraud.