District homeowners should beware of foreclosure rescue scams

Vincent Abell has been sued by the District for violation of its Consumer Protection Act. The details of that lawsuit -- and other complaints involving Abell -- should serve as a cautionary tale for all homeowners tempted by promises of a rescue from foreclosure.

The complaint, filed Sept. 3 in D.C. Superior Court, alleges that Abell engaged in a series of unconscionable transactions with District homeowners desperate to save their homes from threatened foreclosure.

The lawsuit alleges that Abell -- and his company Modern Management -- has homeowners sign documents transferring their properties to him but, instead of paying off the outstanding mortgages, he only pays the amounts needed to prevent the threatened foreclosures. (In the District, once every two years, the law allows a homeowner to halt foreclosure by paying just the amount of the arrears, plus legal fees, foreclosure costs and auctioneer and trustee's fees.)

The District further alleges that Abell profits by renting the house back to its former owner, usually at a rental amount that Abell knows the erstwhile homeowner cannot pay. Ultimately, the homeowner is evicted, and Abell sells the house for a large profit.

The D.C. Court of Appeals -- the highest court in the city -- recently decided another case involving Abell and his management company. The facts in that case parallel the allegations raised in the District's lawsuit.

Maria-Theresa Wilson suffered from health problems and was facing foreclosure in 2003. Calvin Baltimore -- an independent contractor who works with Abell -- approached Wilson and persuaded her to transfer her house to Abell. In return, Wilson could rent back the house but at an amount that exceeded the monthly mortgage that she was unable to pay in the first place.

In 2004, Abell arranged to evict Wilson.

Wilson -- assisted by pro-bono lawyers arranged through AARP's Legal Counsel for the Elderly -- filed suit against Abell, Baltimore and Modern Management. At a trial by jury in March 2007, Wilson was awarded $60,000 in compensatory damages for common-law fraud and for violations of the consumer protection act. The judge, pursuant to that law, tripled that amount. The jury also awarded Wilson $2 million in punitive damages against Abell, $1.1 million against Modern Management and $200,000 against Baltimore.

On appeal, the D.C. Court of Appeals affirmed the judgments. In a 53-page decision released in June, the court provided a comprehensive analysis of the law on punitive damages. According to the court, a key factor in upholding the large judgment "is the degree of reprehensibility of the defendant's conduct." In the Wilson case, Judge Anna Blackburne-Rigsby, writing for the majority, said, "clearly the conduct involved here -- a scheme to dupe Wilson out of the title to the home she owned for 22 years and fought desperately to keep -- was reprehensible." (The case is Modern Management Company vs. Wilson, Case Nos. 08-CV-18, 08-CV-85 & 08-CV-187 (D.C. June 3, 2010).)

However, this column is not solely about Abell. The District's attorney general and the court will deal with him. I want readers to beware of foreclosure scams.

According to the Maryland Office of the Commissioner of Financial Regulation, in addition to "lease buyback" situations, there are other types of foreclosure rescue scams threatening consumers:

-- The phantom helper. You are approached by a stranger who promises that, for a fee, he will arrange to stop your foreclosure and renegotiate your loan. You are advised not to contact your lender. However, the scammer pockets your money and you never hear from him again.