CURRAN CHARGES "FLIPPING RING" WITH UNFAIR, DECEPTIVE TRADE PRACTICES
Baltimore - Attorney General J. Joseph Curran, Jr., took another step forward in his fight to combat the practice known as flipping today, when he announced that his Consumer Protection Division filed charges against a group of Maryland companies and individuals, alleging that the "ring" was involved in a flipping scheme of deceptive sales, financing and appraisals of houses throughout Maryland. The charges were filed under the Consumer Protection Act, and alleged that unfair or deceptive trade practices were committed by:
"The practice of flipping threatens to destroy many old and proud neighborhoods in Baltimore City and in other Maryland communities," Attorney General Curran said. "Flipping is a financial tornado that blows through communities, leaving in its path the devastation of vacant houses and unstable property values."
The charges allege that Shpritz and his companies targeted first-time home buyers who believed they could not buy a home because of prior credit problems, low income or lack of money for a deposit, and promised to get them a home and a loan they could afford. However, according to the charges, the homes that Shpritz sold them were priced substantially higher than fair market value. Shpritz worked with American Skycorp, Inc. to get Federal Housing Administration mortgages for the sales, allegedly engaging in false and illegal loan practices to cover up the inflated sales prices and evade the FHA's loan qualification criteria. Two appraisers, John M. Morgan and Michael Almony, are alleged to have provided false appraisals that justified the inflated sales prices. The charges allege that Shpritz, American Skycorp and its principals, Morgan, and Almony unjustly profited from these deals, while the buyers were left with homes that were not worth what they paid for them and loans they could not afford.
"Flipping's effects are felt well beyond the boundaries of a given neighborhood," Curran said. "The taxpayers lose, too, when FHA insurance has to pay off lenders when these inflated loans go into default. This is a serious problem with far-reaching implications."
The charges are the result of a year-long investigation. Curran's office also announced a consumer education campaign in October, that utilizes televised public service announcements, town hall meetings, and a distribution of a brochure entitled Home Buyers: Beware of Flipping Scams. The second town hall meeting is scheduled for tomorrow night at the Bon Secours Community Support Center, 26 N. Fulton Ave., 1st floor, 7 p.m. The brochure is available by calling the Attorney General's Office at 410-528-8662 or 1-888-743-0023.
A public hearing on the charges will be held at the Office of Administrative Hearings, 11101 Gilroy Road, Hunt Valley, MD 21031-1301 on April 23, 2001 at 9:30 a.m.