Mediation Is Next To Save Homes

Houses Went to Straw Buyers

A D.C. Superior Court judge ordered prosecutors and mortgage lenders yesterday to begin mediation with District residents who were among 400 Washington area homeowners caught in an alleged mortgage scheme operated by a Prince George's County company.

It was the first civil hearing for the case involving Metropolitan Money Store, which federal authorities have accused of defrauding homeowners in Maryland, the District and Virginia from 2004 to 2007.

Last month, federal authorities, in a 25-count indictment, alleged that the company's owner, Joy Jackson, 40, her husband, Kurt Fordham, and six others defrauded lenders and homeowners out of about $35 million. Authorities say the defendants used money from the scheme to pay for a lavish lifestyle that included luxury cars, fur coats and travel. The indictment also mentioned Jackson and Fordham's wedding at the Mayflower Hotel, attended by 360 guests and costing nearly $800,000.

Neither Jackson nor Fordham was at yesterday's hearing. They remain in federal custody.

D.C. Superior Court Judge Joan Zeldon ordered the District's prosecutors and the 13 attorneys representing various mortgage lenders to enter into mediation with owners of 25 D.C. homes and 20 area residents who became straw buyers in the scheme. The mediation is designed to quickly return houses to the original owners.

In the complicated scheme, authorities say, Metropolitan preyed upon homeowners who had poor credit. It would find straw buyers to put their names on mortgages while the homeowners repaired their credit. Each straw buyer was paid about $10,000 per transaction. Metropolitan promised to use the equity from the houses to pay the mortgages for a year and assured the homeowners and the straw buyers that the houses would be returned to the owners.

Prosecutors said Metropolitan never paid the agreed-upon mortgages and left the houses, some of which have since gone into foreclosure, with the straw buyers.

Seven of the straw buyers who attended yesterday's hearing agreed with the judge's decision. District prosecutors have said that once the houses are returned to the owners, they will not pursue charges against the straw buyers.

But attorneys for the mortgage lenders, including Deutsche Bank Trust and Wells Fargo Bank, said no one paid the mortgages for nearly two years. They argued that someone should pay the money owed.

The mediation is scheduled to begin in September.

"A lot of people want to resolve this before it gets worse," said prosecutor Barry Gottfried of the D.C. attorney general's office.