Already under a federal criminal investigation, a Perry Hall real estate broker involved in property flipping in Baltimore has been barred from doing business with the U.S. government for three years and faces the likelihood of a State Real Estate Commission inquiry.
News of actions against William Otto Schmidbauer came as federal agents executed a search-and-seizure warrant yesterday at his real estate company on Belair Road in Perry Hall.
Investigators for U.S. Department of Housing and Urban Development's inspector general office as well as postal inspectors spent several hours at the office and left with two boxes of documents.
Schmidbauer was not at the office, agents said, and he did not respond to phone calls seeking comment.
Other agents executed a search-and-seizure warrant at a Parkville firm, Liberty Title Company, that has conducted settlements of Schmidbauer real estate transactions.
Schmidbauer's property dealings were the subject of an article in The Sun on June 19, which described how he bought and quickly resold at least 30 Baltimore houses in recent years, earning a markup of nearly $1.5 million.
The deals were financed by mortgages insured by the Federal Housing Administration, a HUD agency. In most cases, lenders have foreclosed because buyers defaulted. FHA has since paid the lenders for their losses and acquired ownership of the houses.
A Pennsylvania woman has been the "buyer" of some of these houses. All told, Mary Anne Shirvani Kintop, has signed more than a dozen mortgages worth more than $1 million, using eight different names. Most of the deals involved Schmidbauer.
Two mortgages she signed in 1997 bore the name of her daughter, who is now 9.
Another Schmidbauer "buyer" signed four mortgages in three names.
In some cases, according to tenants, Schmidbauer has rented the houses to them even as lenders were attempting to seize or sell the houses through foreclosure.
After The Sun 's story appeared, HUD moved against Schmidbauer.
According to Engram A. Lloyd, director of HUD's Philadelphia Homeownership Center, Schmidbauer and his company are barred from direct or indirect participation in any transaction that involves the federal government.
That means, he said, that they are excluded from real estate transactions with the government either as a purchaser of a government-owned property or as agent for a purchaser.
He also said that homebuyers who use Schmidbauer or his employees as real estate agents cannot obtain federally insured mortgages.
And lenders who handle federally insured mortgages are required to check HUD's list of barred individuals and companies to see if parties to such transactions are on the list.
"No buyer can get an FHA mortgage if we have knowledge that he [Schmidbauer] was involved in that transaction," Lloyd said yesterday.
Lloyd also asked the Maryland Real Estate Commission to take steps toward an investigation of Schmidbauer.
He sent the commission a copy of The Sun story and wrote that Schmidbauer had been involved in the sale of HUD-owned homes and the use of FHA financing.
"Several of these transactions have been identified as containing evidence that abuse of these programs has taken place," Lloyd wrote. He asked the commission for "review and action as is appropriate."
Karen Napolitano, spokeswoman for the state Department of Labor, Licensing and Regulation, which includes the Real Estate Commission, said the commission had sent Lloyd's letter to Schmidbauer and asked him for an explanation. It gave him 20 days to respond.
The commission also recommended that its staff conduct an investigation. Napolitano said an inquiry would not begin until Schmidbauer responds or his deadline passes.
"The commission has asked for an investigation, and I believe that will happen," she said. Should the commission find wrongdoing on Schmidbauer's part, he could have his broker's license suspended or revoked or be fined.