Baltimore Launches Investigation into Alleged Mortgage Fraud Targeting City Residents

Baltimore City is launching a formal investigation into a suspected mortgage fraud scheme that has resulted in numerous foreclosures, particularly affecting residents in predominantly Black neighborhoods. According to an announcement from Mayor Brandon M. Scott, the Baltimore City Law Department, in conjunction with the City’s Office of Equity and Civil Rights, will examine potential violations of the Fair Housing Act. Recent public reports indicate that out-of-state investors have allegedly employed fraudulent tactics, including the misuse of debt service coverage ratio (DSCR) loans, leading to properties falling into foreclosure.

The Baltimore City Department of Housing and Community Development (DHCD) first flagged concerns regarding these market actors in June 2025. Since then, the department has conducted an extensive review of affected properties throughout the city, identifying those with vacant building notices, code violations, or other indicators of risk. This initiative aims to protect Baltimore residents from predatory practices that threaten homeownership and community stability.

The investigation will focus on whether the actions of these investors constitute discrimination prohibited by the Fair Housing Act. Preliminary findings suggest a disproportionate impact on the “Black Butterfly” neighborhoods in East and West Baltimore, areas with significant Black populations. As an initial step, the City plans to take legal action to recover unpaid taxes and outstanding liens on these properties. The ultimate goal is to determine if there is sufficient evidence to pursue a Fair Housing Act claim against the investors responsible for the alleged fraudulent schemes.

Article by Mel Anara, based upon information from the Office of Mayor Brandon M. Scott

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