A cruel lesson in home buying; Flipping: A first-time purchaser is $60,000 in debt and unable to live in the crumbling house that cost the seller $8,000 a few months earlier.

THE BALTIMORE SUN

From her kitchen window in East Baltimore, Darlene Glover watched the junkies line up in the alley from dawn until well past dark to buy crack cocaine.

Her son watched, too. He was 9 years old.

Desperate to buy a home in a safer neighborhood but lacking good credit, the 42-year-old advertising assistant became a victim of real estate flipping -- an increasingly common practice in which speculators buy shoddy homes and then rapidly sell them to naive purchasers for inflated prices.

Glover paid $60,000 -- twice the amount she thought she was paying -- for a problem-ridden house at 819 N. Kenwood Ave. that a speculator had purchased six months earlier for $8,000, according to city records.

Today she's broke, more than $60,000 in debt, and her dream of home ownership -- "a picket fence, a dog and all that" -- sits cold, dark and empty.

Now renting down the street, she finds the vacant house a painful reminder when she walks past.

"I feel embarrassed. I feel like I failed at something I wanted to do," said Glover.

"It bothers me because I want to be a homeowner and leave something for my children. Now I live in an apartment, and that house is staring me in the face every day," she said.

Like hundreds of other Baltimoreans, Glover was burned by a real estate brush fire that has swept across struggling neighborhoods in recent years, cheating first-time homeowners, lenders and aspiring real estate investors.

More than 2,000 Baltimore houses have been bought and resold for more than double their purchase price in the past three years, the State Department of Assessments and Taxation says. In two major lawsuits, lenders claim that they were duped into providing mortgages that exceeded the value of the houses being financed.

A Sun examination of more than 400 flips found that many deals included falsified documents to make buyers appear creditworthy, inflated appraisals and sham second mortgages -- all aimed at getting a loan for more than the house was worth.

Federal and state investigations are under way, and, sources say, federal investigators have gone beyond document examinations and begun to call in witnesses.

"I was scammed. I gave that lady all my trust," Glover said of Marie Hoffman, who sold her the house.

Hoffman, 52, a landlord and speculator, lives in a waterfront home with a silver Porsche 924 parked in the driveway in the Chesaco Park neighborhood of Baltimore County.

"I don't really remember the case. It was a few years ago," Hoffman said in a brief interview concerning Glover. "She's probably exaggerating. I don't want to talk to you."

Hoffman said that she didn't do anything wrong and added that she didn't know Glover had bad credit.

"The lady is not telling you the truth," Hoffman said, refusing to elaborate.

Need for unbiased help

Will Backstrom, a homeownership counselor for Neighborhood Housing Services in the Patterson Park area, said Glover has not been alone in misplacing her trust. It is not unusual for naive first-time buyers to rely on the seller in making key decisions. And that, he said, is the problem.

Glover "would never have gotten into that transaction if she had had a counselor who had no financial interest in the transaction," said Backstrom.

"The American dream is homeownership -- but not at all costs. People who are thinking of buying a house should come to see us."

Glover is a tall, dignified woman from a middle-class neighborhood in West Baltimore. She flashes a brilliant smile and warm greeting to most people she meets, despite a painful injury to her left knee that makes her limp.

She wears an "I Love Jesus" pin on her long winter coat and has a large portrait of Jesus on her wall, not far from where her now-12-year-old son loves to play Nintendo video games.

Job, evening studies

At 7: 50 a.m. weekdays, she catches bus No. 62 heading west on Madison Street to her $24,000-a-year job as an assistant marketing coordinator for the architectural and engineering firm Daniel, Mann, Johnson and Mendenhall. At night, she takes computer classes at Sojourner-Douglass College.

"Most of my life, I've struggled," said Glover, a divorced mother of two. "I wanted to go to college, because I wanted to be a child psychologist. But my family didn't have the money for it.

"There are times when I get tired of being the breadwinner, the mother and the father. But I put my trust in the Lord and keep going."

Until 1997, Glover and her two sons lived in a rented rowhouse at 1620 E. Lanvale St. in the middle of a violent drug market.

She recalls hearing the pop of gunfire as two neighborhood boys were shot to death on the corner near her home.

Audrey Wilkes, director of the community outreach program at Zion Hill Baptist Church, where Glover volunteered to help needy people, said Glover was brave to try to rescue her sons.

"Sometimes when I drove her home from church, drug dealers would literally be standing on her doorstep," Wilkes said. "She was a strong woman who wanted to do the right thing by moving to a better neighborhood."

Glover saw an ad in The Sun that offered a rent-to-buy deal for buyers with poor credit. She called Hoffman, who she said offered to sell her 819 N. Kenwood Ave. for $29,200.

Exciting opportunity

She was excited about becoming a homeowner in a less dangerous neighborhood north of Patterson Park, despite her poor credit history and then salary of $17,500.

On April 30, 1997, Glover signed on the dotted lines -- many dotted lines.

She recalls the day vividly. Hoffman picked her up at work, she said.

On the drive to a Pikesville title company, Hoffman asked her whether she had $6,000. When she said she didn't, Hoffman handed her six money orders worth $1,000 each.

"She told me to make it look like it was mine," said Glover.

So Glover signed the money orders, put them in her purse and submitted them at settlement. The document that outlines details of the deal lists the $6,000 as "cash from buyer."

Glover was so ecstatic about owning a home that she didn't read everything she signed.

The Rev. Randolph Price, pastor of Zion Hill Baptist Church, recalled that his parishioners held a jubilant home-blessing ceremony for Glover, with two dozen people holding hands in a circle in her living room.

"We all told her she was blessed to buy that house," Price said. "But I guess we should all read the fine print."

Over the next year, Glover gradually learned the grim details of the agreement. The price was $60,000 -- not $29,200. She had signed two mortgages, not one, as she thought.

The first was a 30-year loan from One Stop Mortgage Inc., a Wyoming firm, with $294 monthly payments and an interest rate of 11.7 percent that could rise to 18.7 percent but never decline.

The second mortgage was from Hoffman -- for $24,750 at 10 percent interest.

Secret second mortgages are a device commonly used in flips to trick lenders into thinking they aren't the only people putting money on the line. Although those who issue them often do not seek to collect monthly payments, the second mortgages become liens against the houses, preventing resale unless they are paid off.

In Glover's case, Hoffman never pursued the $217 monthly payments for the second mortgage. But the agreement requires Glover to pay off the entire $24,750 on May 1, 2002.

"I felt stupid," Glover said. "I didn't want anybody to know. I didn't want my family to know."

Glover realized her dream house had become a frightening burden.

The house looked good when she bought it, with new carpeting and a fresh coat of white paint slapped over the wallpaper.

But it wasn't long before problems surfaced. The roof leaked into the second-floor bathroom, dislodging chunks of plaster. Most of the radiators and many electrical outlets didn't work. During the winter, the house became so cold that she and her sons could see the breath rising from their mouths in the living room.

The pipes to the bathtub weren't hooked up properly, so when she turned on the faucets water would ooze through the kitchen ceiling. The bathroom sink and kitchen counters weren't attached to the walls. The basement flooded; the shower spat only a trickle.

"My older son became angry at me. He'd tape the wallpaper back, and say, 'Mom, you bought what was supposed to be an all-new house, and all this terrible stuff is happening.' "

Hoffman said the house was in good condition, and she added that Glover had plenty of time to look it over before buying it. "We repaired the whole house inside and out," Hoffman said.

Glover said this is false. But she admits she mismanaged her money and fell behind in the mortgage payments. After her primary lender filed a foreclosure suit on July 31, 1998, she moved out, fearing she would be thrown out on the street.

She moved into an apartment a half-block south on Kenwood Avenue, dreading the $60,000 debt hanging over her head. The foreclosure suit was dismissed for lack of prosecution in August. But Glover is afraid to move back into the vacant home because the lender could resurrect it at any time.

Impact on personality

Denise Murchison, Glover's sister, said Glover has suffered not only financially but also emotionally. Her normally free-spirited personality changed as she became more introverted and suspicious.

"She thought buying this house was such an accomplishment," said Murchison. "And then she found out it was just a rip-off. It was devastating. She doesn't trust anyone anymore."

Still, Glover remains hopeful about the future for herself and her sons. She's determined to keep working hard, taking her computer classes at night. And she dreams of starting her own desktop publishing business someday.

"I wanted the house, the dog, the husband and the car by this time in my life," she said. "I don't have any of it. But I'll get it someday. I believe."

And she's struggling with her attitude toward Hoffman.

"I've gotten over my anger," she said. "I really have. I'm trying to forgive her.

"I just want to ask her why."

Hoffman said: "I don't understand the question. Why would she buy a house if she didn't want it?"

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