A class action lawsuit is proceeding against Metropolitan Money Store (MMS), the foreclosure consultation company that scammed hundreds of troubled Washington, D.C.-area homeowners out of money by promising to help them keep their homes and improve their credit.
From September 2004 until June 2007, MMS employees preyed on consumers who had considerable equity in their homes but struggled to keep up with monthly payments. MMS representatives approached these homeowners promising to help them avert foreclosure and improve their credit scores. As the central part of its scheme, MMS asked homeowners to release title of their property to a third party for one year.
The third party -- or straw buyers, as they are referred to in the indictments -- were supposed to withdraw equity from the consumers' homes and use it to pay off mortgages and other expenses, and to generally improve homeowners' credit. Instead, the straw buyers withdrew as much equity from the homes as they could, while applying for mortgage loans vastly exceeding the value of the house. The buyers then paid off the homeowners' original mortgage and converted the rest for their own use.
According to the complaint, MMS engaged in a massive advertising campaign on a number of fronts, targeting homeowners with financial problems and African-Americans.
The suit was brought on behalf of three families, all of whom reside in Maryland. In addition to MMS, the suit names as defendants Joy Jackson, Kurt Fordham, Jennifer McCall, and Clifford McCall, all of whom were indicted in June 2008 for conspiracy to commit mail fraud and wire fraud, as well as money laundering. All four defendants designed and participated in the MMS scheme, and Jennifer McCall went so far as to act as a straw buyer in several transactions.
All have since pleaded guilty to the charges against them, along with six other defendants. The charges carry a maximum sentence of 30 years in prison; Fordham was sentenced to 10 years last month.
Prosecutors say case is one of the largest mortgage fraud schemes in Maryland history. While the scam has had a devastating effect on the more than 200 consumers who fell for it, even homeowners not directly affected may take a hit. The lawsuit predicts that entire neighborhoods will lose millions of dollars in home values as a result of the high number of foreclosures that have occurred, or are just around the corner.
The complaint notes that the FBI has already identified the Washington, D.C. Metropolitan area as a 'hotspot' for mortgage fraud, and predicts that the MMS scam will likely move it to the highest possible ranking.
The complaint alleges violations of the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), the Real Estate Settlement Procedures Act (RESPA), and a Maryland fraud statute. The court said that, if the case goes to trial, it will begin early next year.