By Dina ElBoghdady
Washington Post Staff Writer
Monday, January 21, 2008
Five D.C. residents who say they were tricked into signing away their homes have reached out-of-court settlements that enabled them to regain ownership and a total of $455,000.
The settlements end a three-year-old lawsuit, a rare happy ending for the growing number of people who claim to be victims of foreclosure rescue scams.
In the suit, the elderly plaintiffs alleged that to stave off foreclosure they signed paperwork for what they thought were loans that would cover missed mortgage payments. Instead, they had signed away their homes to Washington businessman Vincent L. Abell and his associates.
Abell's attorney said his client has not admitted wrongdoing and has agreed to settle for business reasons.
Walter J. Malone, one of the plaintiffs, said he was charmed by Calvin N. Baltimore, one of Abell's associates and a former preacher, because Baltimore seemed to share his religious values.
According to the suit, Malone had considered filing for bankruptcy protection in 2004, after he fell $8,400 behind on the mortgage on the house he bought with his wife in 1994. Baltimore assured him that he could arrange for Malone to continue to live in and own his home in Southeast Washington, the lawsuit alleges. Baltimore allegedly said he would bring Malone's mortgage current. In return, Malone agreed to make monthly payments to the defendants. He had an option to repurchase the home a year later for $215,000. A lawyer representing Baltimore could not be reached for comment.
"The buyback terms were so onerous that there was no way to meet them," said N. Thomas Connally III, a lawyer at Hogan & Hartson, who, with AARP, represented the plaintiffs. "The arrangements were designed to fail from the start, and they allowed Mr. Abell to take ownership of the property by paying the former owner almost nothing."
The monthly payments were often so high that many of the plaintiffs fell behind, lost their buyback option and ended up facing eviction, said Connally, whose firm worked on the case pro bono.
That's when some of them discovered that they had transferred their property titles to Abell, Connally said. Even though they no longer owned the homes, they remained responsible for the mortgages -- which, in Malone's case, had not been paid.
"It was risk-free for Abell," Connally said. "He could get the home and sell it if the property appreciated. He could walk away from it if it depreciated."
Many of the homeowners didn't realize or didn't want to accept that their problems could have been solved if they sold their homes. The plaintiffs each had tens of thousands of dollars in equity in their homes. The amounts due on their mortgages ranged from $8,000 to $16,000.
"Each person was attached to their homes," said Jean Constantine-Davis, an AARP lawyer. One plaintiff, Idriis Bilaal, was born in the home he was trying to keep.
"In some ways, Abell really leveraged that because he gave them the option to stay in their houses," Constantine-Davis said. "That was the selling point."
Malone said he was elated by the terms of the settlement. He received the title to his house, now valued at $350,000. He has also received $120,000 in cash, according to AARP.
"It was something that was real distressful because I had no idea what was going to happen," Malone said. "I'm so relieved. I feel like I lost all that age off of me. I feel like a young person again."
Connally said that as part of the agreement, neither the plaintiffs nor their lawyers know which defendants made the payments.
The suit was filed in D.C. Superior Court in 2004. One of the plaintiffs, Willie King, who was 71 then, died during the litigation. His case remains in limbo. Both sides said that a settlement agreement involving Dennis Dyer, one of Abell's business associates, was read into the court record on King's behalf. The judge upheld the agreement, said Gregory M. Fisher, an attorney for Dyer. But Dyer "is appealing the court's decision that an agreement was reached."
Abell, who has a criminal record for mortgage fraud in the 1980s, said through his lawyer that he settled to avoid further disruption in his business, not because he did anything wrong.
"Mr. Abell denies any and all liability," said his lawyer, David H. Cox of Jackson & Campbell in the District. "The associated expense, the business disruption and uncertainty in litigation dictated that a businesslike resolution be negotiated and honored."
Abell's legal troubles are not over. In March, after a two-week trial in D.C. Superior Court, a jury awarded more than $3 million in punitive damages and $60,000 in compensatory damages to Maria Wilson of the District, who had separately accused Abell, his company and Baltimore of defrauding her in a similar foreclosure rescue operation.
On Jan. 9, Judge Mary A. Gooden Terrell denied the defendants' motions to set aside or reduce the verdict, Connally said.
"Whether she'll ultimately be able to collect from those folks, who knows?" said Connally, who represented Wilson.