Hopeful home buyers find they've bought nightmares Deceptive mortgage practices alleged in 1st-time buyer's suit

February 04, 1998|By Brenda J. Buote and John B. O'Donnell | Brenda J. Buote and John B. O'Donnell,SUN STAFF

For Cheryl Parker, a single mother with four daughters, the two-story Patterson Park rowhouse seemed the answer to a prayer.

Never mind that it was in rough shape. Never mind that she was living hand to mouth and had poor credit. With guidance from the seemingly beneficent seller, Robert L. Beeman, Parker was able to buy the North Curley Street rowhouse with $500 down.

Sixteen months later, the promise of homeownership has soured. Personal setbacks have left Parker unable to continue mortgage payments. She's in bankruptcy. Her house is about to be auctioned.

And, according to allegations in a recently filed lawsuit, Beeman was anything but a friend. Beeman is accused of defrauding Parker and as many as 69 other people, mostly poor first-time home buyers.

The lawsuit, filed in Baltimore Circuit Court, alleges that Beeman sold them houses at inflated prices -- using inaccurate appraisals, "secret" second mortgages and falsified documents.

And while he pocketed a profit of $20,000 to $25,000 on each deal, the lawsuit alleges, buyers were left owing mortgage lenders more than the houses were worth.

Beeman did not respond to two phone messages seeking comment or to a note left at his home in Wilmington, Del. A letter hand-delivered to his mailbox at Postman Plus in Parkville also went unanswered. His lawyer, Stanley Alpert, declined to comment.

Parker, a nursing assistant, thought she paid $52,000 for 207 N. Curley St. But, records show, the price was $72,000 for a house Beeman bought for $21,500. Parker alleges that Beeman falsified documents to close the deal.

"I remember telling my girls that our prayers had been answered. We were finally going to have a home of our own," said Parker, 40, who was so happy with the deal initially that she referred at least 10 others to Beeman and collected $500 in finder's fees. "I still find it hard to believe he did this to me."

The allegations have alarmed Patterson Park leaders, who have been fighting for years to prevent investors from buying property in the area. In the past two years, Beeman bought at least 50 properties in the neighborhood, records show.

"If the allegations against Mr. Beeman are proved true, he's done damage to more than just the people who bought homes from him," said Mary Hennigan, president of the 200 North Association, a civic group. "He's damaged all of us in the community who have worked so hard to maintain our properties and encourage homeownership."

Officials with Neighborhood Housing Services of Baltimore Inc., a private, nonprofit loan and counseling group, agree.

"They demoralize residents and create chaos," said Will Backstrom, a homeownership coordi- nator with NHS. "Speculators will often sell to people who do not have stable incomes, who can't make their monthly mortgage payments or keep up with maintenance costs. The buyers end up going through foreclosure and bankruptcy -- often leaving vacant properties behind."

The lawsuit against Beeman and more than two dozen other defendants was filed two weeks ago by Yvonne Peaks, who bought a Montford Avenue house from Beeman in April. Parker and at least 50 other people said last week that they would join the lawsuit, according to Peaks' attorney, Andre Weitzman.

The lawsuit seeks sizable damages for people who bought houses in Baltimore from Beeman's firm, A Home of Your Own Inc. It charges Beeman, his company and 26 other defendants with unfair or deceptive trade practices in violation of the Maryland Consumer Protection Act and with fraud.

Here, according to the suit, is how Beeman's transactions worked:

He would pay $5,000 to $20,000 for a rowhouse that was vacant or in poor condition, then find a buyer by promising to sell for only $500 down. Beeman then would make modest repairs. Meantime, he would have a Baltimore firm, Macallan Funding Inc., arrange financing.

Macallan, a defendant in the suit, would obtain "extremely inflated" appraisals of $70,000 to $85,000 on the properties, which were typically worth $35,000 to $45,000. Using the inflated appraisals and other documents that justified the price, Macallan would find a lender to provide a mortgage for 60 percent to 70 percent of the appraised value -- an amount that was greater than the value of the house.

Using one of several title companies, Beeman and Macallan allegedly arranged a settlement based on falsified figures and documents, including false amounts for the sale price and down payment, and a supposed contribution toward settlement costs by Beeman or his firm that was not made.

Contrary to falsified documents, the only funds at settlement were those supplied by the first mortgage lender, typically about $51,000. After recording costs, the title company and Macallan were paid and Beeman recovered his expenses, the suit contends, he would be left with $20,000 to $25,000 in profits.

Michael M. Fishman, president of Macallan, would not comment except to dispute the suit's claim that Macallan was involved in all 70 transactions it cited.

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