Key facts
- Ameritrust Mortgage Corp. sued investors, brokers, appraisers, and title companies in federal court.
- The lawsuit alleges a real estate fraud scheme in Baltimore caused Ameritrust over $14 million in losses.
- The scheme involved approximately 90 loans on Baltimore-area investment properties.
- Named defendants include FirstLoans Inc., REXTAR Title Services, and Fidelity National Title.
- Ameritrust claims properties were bought for $40,000-$50,000 and resold within months for $200,000 without improvements.
- The lender alleges loan applications relied on fraudulent appraisals and title reports that omitted recent lower-priced transactions.
Ameritrust Mortgage Corp. has filed a lawsuit in the U.S. District Court for the District of Maryland, alleging that a group of investors, a mortgage broker, appraisers, and title companies orchestrated a real estate fraud scheme in Baltimore. The scheme, involving approximately 90 loans on investment properties, has resulted in an estimated $14,076,000 in losses for the lender. Ameritrust claims the defendants operated an "extensive real estate fraud ring" that severely disrupted the mortgage lending market for investment properties in the Baltimore area.
The lawsuit details allegations that investors created special-purpose limited liability companies to purchase properties for $40,000 to $50,000. Within months, these entities allegedly resold the properties to other shell companies for around $200,000, representing a roughly 300% markup, without making any improvements. Ameritrust asserts that loan applications for these inflated prices relied on fraudulent appraisals and title reports that concealed the recent, lower-priced transactions.
According to the complaint, the proceeds from these loans were paid to the seller at closing, with the buying entities having no intention of repaying the loans, knowing the lender was under-collateralized. The buying entities reportedly defaulted almost immediately. Some of the involved LLCs sought bankruptcy protection, which Ameritrust claims was a tactic to shield participants from liability. These bankruptcy cases have since been voluntarily dismissed, prompting Ameritrust to pursue civil claims.
Ameritrust is accusing the defendants of breach of contract, civil racketeering under the RICO Act, fraud, conspiracy to defraud, and negligent misrepresentation. The lender contends that the alleged conduct extends beyond its own losses, suggesting the scheme was repeated hundreds of times, damaging local real estate values and the secondary market for nonagency investment property loans. The complaint also notes that subsequent foreclosures and abandoned homes have negatively impacted public safety and destabilized vulnerable neighborhoods.