Anatomy of a Fraud - 1314 W Lafayette Ave

Long story short:
Two guys bought a house from an estate for $1K in 2006 and sold it to a woman for $29K in 2007. The woman got a renovation loan from K Bank for $156K. Then she sold it to one of the original guys who she bought it from for $258K in 2008. The guy got foreclosed on and the bank took it back for $144K in 2010. Then the bank sold it to a third party for $15K in 2011. Your TARP money at work…

The juicy details:
1314 W Lafayette was purchased by Ricardo Rowe and Darius Waters in Nov 2006 from the Estate of Charles Grandy for $1,000. They may have had to pay back taxes, water, and an undisclosed outstanding mortgage balance, so when they sold the property to Evelyn Waters in Feb 2007 for $29,450, it wasn’t that notable of a transaction. Ms Waters took an acquisition & renovation loan from K Bank for $156,000. It’s a big house – still not necessarily a notable transaction. In Nov 2007, however, she sold it back to Ricardo Rowe for $258,000. Ricardo got a loan from Metrocities Mortgage for $245,100. This is a notable transaction.

13 months later, the property was officially in foreclosure. In Dec 2010, the property was transferred to FNMA since they purchased the $245K note from Metrocities Mortgage after it was originated in Nov 2007. FNMA then sold the property to Chris Campbell for $15K and recorded a $230K loss that we, the American taxpayers, paid for.

Did Chris Campbell get a good deal at $15K? Maybe. The question I want to have answered is why Ricardo Rowe agreed to purchase the property for $258,000 after he sold it to Evelyn Waters for only $29,450 only 9 months before. A cynic might get it in his head that this sale wasn’t an arms-length transaction, and that Evelyn Waters and Ricardo Rowe shared in the profits of this deal. Ricardo used some of the proceeds to make payments on the $245,100 mortgage that he got from Metrocities, and then let the property go into foreclosure. A cynic might say that Ricardo Rowe never had any intention of making payments for 30 years like he signed his name to. A cynic might suggest that Ricardo Rowe and Evelyn Waters committed fraud.

That is a question for the Department of Labor Licensing and Regulation of the great State of Maryland, though. It’s really none of my business – except the part about my tax dollars being used to bail out a probable fraud scheme and the fact that fraudsters are one of the main reasons that banks tend to redline urban areas like 21217, where this property is located. This kind of transaction is bad for the Baltimore City and bad for the American taxpayer.

The DLLR might take the position that this is a victimless crime, though. No one involved in the transaction is claiming to be hurt. In fact, since the paper was sold to FNMA, the only one who got hurt is the American Taxpayer, who doesn’t have a voice in this transaction. I found this series of transactions in 10 minutes of public record research. Why aren’t there hundreds of open cases against probable fraudsters?

Ricardo Rowe lives in Columbia, MD. Research into Ricardo shows strong business ties with Darius Waters of Randallstown, MD and Derrick Spruell. All three gentlemen are subjects of multiple foreclosures including:
-          2728 Pennsylvania Ave – Bank’s statement of debt was $113,829, sold third party in March 2011 for $12,500  
-          1340 W Lafayette – Bank’s statement of debt was $153,733, sold third party in August 2010 for $15,000

In those three addresses alone, there is nearly $500,000 of losses footed by the American taxpaying public. It’s ok, though. They were probably just victims of the downturn in the real estate market…