Monday, August 13, 2007

D.C.-Area "Cash Back" Real Estate Investment Program Offering Something For Nothing?

(revised 8-20-07)
Over the last two Sundays, The Washington Post ran stories about an outfit based in Maryland that is offering what could be described as a "cash back" real estate-based investment program that reportedly has hundreds of people enrolled in the program, with a heavy concentration in Prince George's County, Maryland. A June solicitation letter from this outfit said there are more than 700 homes in the program, according to The Post article. Last Sunday's describes the arrangement as follows:


  • "Here's the pitch: There is an invitation-only group of homeowners who have signed up as partners with an organization called Metro Dream Homes, which has offices in the District. Members buy a house, sometimes for more than the asking price and without a down payment. A condition of the sale is that the seller agree to give back 10 to 15 percent of the sales price to the buyer, who in turn pays it into the coffers of Metro Dream Homes. (What does the seller get? A sale, which can be hard to come by these days.)

  • Metro Dream Homes says it will invest that cash in various businesses, including automated teller machines, video advertising and other Web-based ventures that are under the umbrella of its parent group, Metropolitan Grapevine, headquartered in Laurel. Then, according to Metro Dream Homes, the profit from these businesses goes to fund the monthly mortgage payments for the homeowners, on an accelerated schedule that pays off the house in five to seven years. The company also says it will make sizable contributions to charity. After five to seven years of payment-free living, the homeowner is supposed to sell or refinance the house, with the homeowner and Metro Dream Homes sharing the equity."
Last Sunday's story also reports that: "Among the skeptical but tempted is a group of builders in the Fredericksburg area looking at the program as a way to get rid of unsold houses."

Yesterday's story took a closer look at the umbrella group for this program, Metropolitan Grapevine and its chief executive, Andrew H. Williams. Among other things, The Post reports that:


  • "[The Maryland Attorney General] obtained a permanent injunction shutting down Bankcard Group Inc., a Prince George's County-based ATM and bank card business that Williams ran. The company and two of its executives, one of them Williams, were accused of violating Maryland securities laws by operating an unregistered and fraudulent automated teller machine investment program.

  • According to the [2001] press release the attorney general's office put out six years ago, BGI raised as much as $3 million from at least 200 investors. The company purported to sell investors interests in ATMs, the fees generated by the machines, and shares in BGI itself, the attorney general's office said."

The Post attempted to get answers to some questions about the financing process by which the homes are purchased. According to the reporter:

  • "No one involved with the organization has been able to explain to me how the home-sale transactions, made for more than the asking price and with 10 to 15 percent cash givebacks, get through the appraisal and loan-underwriting process. Some of that information is proprietary, Dream Homes executives told me."

For more, see:

Go here for a Metropolitan Grapevine, LLC Press Release.

Go here for other posts on Metro Dream Homes.

posted by Home Equity Theft Reporter at 12:01 AM