Va. Joins Md. in Halting Mortgage Firm's Program

The state of Virginia has joined Maryland in blocking Metro Dream Homes from offering homeowners mortgage-free living through a complex investment program, citing concerns about potential consumer "harm and economic loss."

The Virginia State Corporation Commission late Wednesday issued a temporary injunction to stop the company from soliciting investors for 90 days, pending a Sept. 18 hearing.

The order follows a similar action by the Maryland Attorney General's office on Aug. 15. In that case, the company is scheduled to file an answer to the allegations by Monday.

The company's unique offer has attracted plenty of customers, as well as plenty of consumer inquiries to government agencies about its legitimacy. Metro Dream Home operates under a number of names, including POS Dream Homes, Metropolitan Grapevine and Metro Dream Homes of Fredericksburg; it lists business addresses in Maryland, Virginia and the District.

Last year, the company began inviting investors to seminars to promote its products. In many cases, home buyers agreed to take out mortgage loans then turn over 10 to 15 percent of their home equity to the company.

Buyers also gave the company another $5,000. In exchange, the company agreed to invest the money in automated teller machines, credit card readers and other "revenue generating devices" and use the profits to pay off the mortgages in five to seven years and donate money to charities, according to the Maryland Attorney General's office. At the end of that period, the homeowner agreed to give the company 50 percent of the total equity in the home.

Reports about Metro Dream Homes' operation appeared in The Washington Post early last month.

Attempts to reach two company officers, Isaac Smith and Andrew Williams, were unsuccessful yesterday. Ron Worthy, an attorney for the company, did not return a call for comment.

In an interview last month, Williams defended his operation, telling the Post: "If everybody knew about our program, everybody in the world would be running in to get this great deal."

In an Aug. 28 document, the Virginia Corporation Commission's Division of Securities and Retail Franchising said the company was offering investors returns that "mathematically . . . appear impossible to achieve."

It also said the company failed to register with the state of Virginia to sell securities.

Last month, the Maryland Attorney General's office expressed concern that the company may not have invested the money to create the profits it promoted, leaving open the possibility that it used payments from one investor to pay mortgages of others, a practice commonly referred to as a Ponzi scheme.