Baltimore investigating alleged mortgage fraud scheme by out-of-state investors
Baltimore is launching an investigation into a small number of out-of-state investors who, the mayor's office claims, are behind a mortgage fraud scheme.
Mayor Brandon Scott has tasked the City's Law Department and Office of Equity and Civil Rights to investigate possible violations of the Fair Housing Act, saying the alleged scheme has led to foreclosures in the city.
"Protecting Baltimoreans is my number one job as Mayor, and that means going after anyone who tries to defraud our residents — especially from outside of the city," Mayor Scott said in a statement.
The Fair Housing Act prevents discrimination on the basis of race. According to the mayor's office, the targeted properties were located in predominantly Black neighborhoods in East and West Baltimore.
The city will also preliminarily file actions to collect thousands of dollars in unpaid taxes and liens by the property owners as officials investigate to determine if there are grounds for action against the investors under the Fair Housing Act.
"If you try to get rich by targeting our residents and abusing programs designed to repair historic harm, we are going to use every legal resource available to hold you accountable," Baltimore Solicitor Ebony Thompson said in a statement.
The mayor's office alleges that the investors misused debt service coverage ratio (DSCR) loans, putting residents at risk due to foreclosures on their properties.
The loans have become more popular in the past five years, as they usually have less strict requirements and do not have a borrowing limit, our partners at the Baltimore Banner reported.
According to the mayor's office, the City Department of Housing and Community Development identified the risks of the scheme in June 2025. The department conducted an analysis of the impacted properties, identifying properties that had Vacant Building Notices (VBN), code violations and other risk indicators.
