The Signal / Lending and appraisal / October 9, 2026
A Baltimore DSCR loan, step by step
How a $45,000 rowhome carried a $174,000 loan A postmortem of the Baltimore DSCR scheme
From 2022 on, investors tied to one group borrowed more than $100 million from private lenders against about 700 Baltimore homes, the Baltimore Banner reported. Many had sold months earlier for a fraction of the loan. We follow one composite loan from the first sale to the foreclosure auction and show who did what.
The composite loan, illustrative
- Prior sale
- $45,000
- Recorded resale
- $217,500
- Loan funded
- $174,000
- Lender loss
- $144,000
The short version
Eight steps from a $45,000 rowhouse to a $174,000 loan, and who took each one
This is the scheme as the lenders describe it in their lawsuits, run on our composite numbers. Each step is explained with its sources in the chapters that follow.
- 01
A company tied to the investor group buys a rowhouse cheap
The house has a tenant and needs work. It sells for somewhere between $35,000 and $57,000. Our composite uses $45,000.
Alleged - 02
A related company buys it back at about four times the price
Weeks or months later a second company tied to the same group buys the house for about $200,000, with no repairs that would explain the jump. Property records call the sale arm’s length, meaning between strangers.
Alleged - 03
The broker orders the appraisal
The buyer applies for a loan through FirstLoans, a broker. FirstLoans orders the appraisal in its own name and later passes it to the lender, AmeriTrust, so the lender never picks who values the house.
Alleged - 04
The appraiser leaves out the cheap sale
Jason Taylor or Christopher Actie values the house at about the new price and writes that it has not sold in three years. The earlier deed is in the city’s land records, and appraisal standards require the appraiser to analyze it.
Alleged - 05
The title report leaves it out too
REXTAR Title Services, which runs the closing, issues a title report that also skips the earlier sale.
Alleged - 06
The lender lends 80% of the inflated price
AmeriTrust lends $174,000. The settlement statement shows the buyer paying the other $43,500, but AmeriTrust says money like this went back to the buyers through “sham renovation invoices” and other payouts.
Alleged - 07
The selling side keeps the difference
The house cost $45,000 a few months earlier. The lender’s money alone covers that and leaves $129,000 for the people on the selling side.
Illustrative - 08
The buyer stops paying
Payments stop within a few months. AmeriTrust has already sold the loan, and the investor who bought it makes AmeriTrust take it back. On our numbers the lender recovers about $30,000 of $174,000.
Illustrative
No public document follows a single Baltimore loan from start to finish, so the loan in this article is a composite, with numbers we built from ranges in three sources. The lending and appraisal steps come from the suit AmeriTrust Mortgage Corp. filed in federal court in Maryland on September 9, 2026, case 1:26-cv-03574. The complaint itself is not public yet, so we rely on how National Mortgage Professional and HousingWire reported it, including its three example transactions. National Mortgage Professional ↗ The seller’s side comes from the Baltimore Banner’s story about Melvin Davis, who sold an East Baltimore rowhouse to one of Eluzer Gold’s companies in 2023. Baltimore Banner ↗ How the money moves at closing comes from the one deal a court has ruled on: the criminal case against attorney Jacob Rappaport and wholesaler Alexander Schultz over 42 Baltimore houses in 2021. U.S. Attorney’s Office ↗
The sources range from a guilty plea to a lawsuit no court has ruled on, so every claim carries one of these seven labels.
- Conviction
From a criminal case that ended in a guilty plea or a sentence.
- Alleged
From a civil complaint. No court has ruled on it.
- Reported
From press reporting. Not tested in court.
- Court record
Docket entries in a non-criminal case: filings, orders, dismissals.
- Rule
From a statute, regulation or standard, or a regulator’s own published record.
- Illustrative
Our numbers, built from reported ranges to make the mechanics concrete. Not a real transaction.
- Inference
Our reasoning from the documented facts.
The first two figures are the Banner’s. Jon Hornik of the National Private Lenders Association, a trade group, counted differently: about a dozen lenders and roughly $160 million in loan balances. Private Lender Link ↗
About the people named. The investors, appraisers, broker, title companies and appraisal management companies in this article have been sued or written about. None had been charged with a crime as of October 9, 2026, and what the lawsuits say about them is unproven. The only people we found sentenced over Baltimore deals in this network are Rappaport and Schultz, for the 2021 sale of 42 houses. Baltimore Banner ↗
Who did what
What each party was supposed to do, and what the record says they did
Each card gives the party’s job in an honest deal, what the lawsuits or the reporting say they did, and why it mattered to the loan. The label covers the record; the last line is our reading.
- 01
Original owner
Small landlords such as Melvin Davis
Their jobSells the house for a fair price
What they didDavis was offered about $100,000. The deed recorded the sale at $220,000. He called the arrangement “weird” but harmless.
Why it matteredDavis is not accused of anything. A deed that overstates the price by $120,000 is still a public sale that a later appraisal can cite.
Reported - 02
Wholesaler
Shraga Chaim Lerner and about two dozen LLCs
Their jobFinds houses and connects sellers with buyers
What they didSold close to 200 houses to Gold and Eidlisz companies starting in October 2022. One batch of 171 that had sold for $10 million was resold for more than $37 million. A Lerner company took $15,000 at the Davis closing.
Why it matteredThe cheap first sales show what the houses were worth. The loans were sized on the resales.
Reported - 03
Sponsor
Benjamin Eidlisz
Their jobRuns the properties for the investors
What they didRan day-to-day operations for B&H Ventures and was associated with Gold, the buyer. A company he controlled took $92,000 out of the Davis sale.
Why it matteredA sale between associates says little about market value, even when the deed calls it arm’s length.
Reported - 04
Borrower
LLCs controlled by Eluzer Gold
Their jobPays a fair price, puts real money down and makes the payments
What they didSigned every buyer’s settlement statement in AmeriTrust’s exhibit. AmeriTrust says the down payments came back to the buyers and that the buyer “had no intention of ever repaying the loan.”
Why it matteredA buyer with none of their own money in the house has little reason to keep paying.
Alleged - 05
Broker
FirstLoans Inc.
Their jobSends the lender an honest loan application
What they didSigned AmeriTrust’s broker agreement in March 2024, submitted the loans and ordered the appraisals in its own name.
Why it matteredAppraisal independence rules exist to keep the people who profit from a closing away from the choice of appraiser.
Alleged - 06
Appraisal management company
Not identified in AmeriTrust’s case
Their jobAssigns appraisers and keeps them at a distance from the deal
What they didTook the appraisal orders from the broker, in the broker’s name. The finished reports were then transferred to the lender.
Why it matteredThe order still started with the broker, so the distance an AMC is meant to provide was not there.
Alleged - 07
Appraisers
Jason Taylor, Christopher Actie
Their jobGive an independent value and analyze any sale of the house in the past three years
What they didOne of the two signed every appraisal in AmeriTrust’s exhibit and in the Banner’s 88-file sample. The reports said the houses had not sold in 36 months, when they had sold months earlier for $35,000 to $57,000.
Why it matteredWithout the earlier sale in the report, a $215,000 value looked ordinary.
Alleged - 08
Title and settlement
REXTAR Title Services; Fidelity National Title as underwriter
Their jobSearch the property’s history and run an accurate closing
What they didREXTAR handled every closing in AmeriTrust’s exhibit, and its title reports left out the recent cheap sales. Fidelity issued the title policies and closing protection letters.
Why it matteredThe title search was a second chance to find the same public deed.
Alleged - 09
Originating lender
AmeriTrust in this composite; Roc Capital, RCN Capital and others in the wider network
Their jobChecks the deal, decides how much to lend, then keeps or sells the loan
What they didFunded 87 of 91 loans at exactly 75% or 80% of the recorded price and sold them to investors soon after. AmeriTrust is suing as a victim of the scheme.
Why it matteredIt accepted appraisals the broker ordered and lent the program maximum on prices that had jumped within months.
Alleged - 10
Loan buyer
Unnamed secondary-market investors
Their jobBuys performing loans and can return ones that break the seller’s promises
What they didMade AmeriTrust buy loans back when borrowers missed their first payments.
Why it matteredHornik says the scheme came to light this way, when an investor noticed the values did not add up.
Alleged - 11
Closing attorney and wholesaler, 2021
Jacob Rappaport, Alexander Schultz
Their jobClose the sale honestly and hold the buyer’s money in trust
What they didIn a 42-house deal, the lender was not told the real price, and a third party’s money was passed off as the buyer’s down payment through Rappaport’s trust account. Rappaport was sentenced to 15 months, Schultz to two.
Why it matteredIt is the one Baltimore deal in this network where a court has accepted how the money moved.
Conviction
Two more parties appear elsewhere in the record. Outside reviewers checked the values in the Banner’s 88-file sample and flagged them as high risk, and the lender approved the loans anyway (chapter 07). And the second lawsuit, filed September 19, 2026 by Commercial Lender LLC and RCN Capital, names two appraisal management companies, Appraisal Nation and Incenter Appraisal Management, and the valuation firm Clear Capital as defendants. The court’s docket summary does not say what it accuses each of. Docket 1:26-cv-03725 ↗
Sourcing and resale
The house sells twice in a few months, the second time between related companies at about four times the price
Our composite house is a two-story brick rowhouse in East or West Baltimore with a tenant paying $1,100 to $1,400 a month. Houses like it moved through Shraga Lerner, a wholesaler who ran about two dozen companies to buy, sell and manage Baltimore homes, and who “sometimes acquired limited liability companies that already owned small portfolios of homes.” Starting in October 2022 he sold close to 200 homes to companies run by Gold and Eidlisz. One group of 171 had sold for $10 million and was resold for more than $37 million. Baltimore Banner ↗ The permit records show little renovation: more than 70% of the linked homes had no renovation or construction permit since at least 2019. Baltimore Banner ↗
AmeriTrust describes the pattern this way. A company tied to the investor group buys a house for $35,000 to $57,000. Within months, sometimes weeks, it sells the house to a different company tied to the same group for about $200,000, with no improvements that would justify the increase. HousingWire ↗ Alleged Property records call the transfers from Eidlisz’s companies to Gold’s “arms length,” the term for a sale between unrelated parties, though the Banner reported the two men were associated. Baltimore Banner ↗
Davis called the arrangement “weird” but harmless and said similar deals happened on other homes nearby. Baltimore Banner ↗ Add up the two payouts and at least $107,000 of the $220,000 went to Eidlisz’s and Lerner’s side of the table, more than Davis himself was offered. Inference
The one deal in this network that a court has ruled on worked the same way, 42 houses at a time. In September 2021 Rappaport, a Towson attorney, negotiated contracts to buy 42 homes at $87,500 each. A second buyer had agreed to pay $112,500 each, and the co-conspirators agreed to write that price up to $165,000. On December 9, 2021 the homes were bought for $3,675,000 and resold the same day for $6,930,000. The lender financing the resale was not told the true price. U.S. Attorney’s Office ↗
- Sep 2021Contracts at $87,500 a home Conviction$3.675M
- Dec 9, 2021Same-day resale at $165,000 a home Conviction$6.93M
- 2022Sale to Zahav Ventures, an LLC controlled by Eluzer Gold ReportedAbout $9.9M
On its own, a big jump between two sales proves little in Baltimore. ATTOM’s data put gross margins on Baltimore-area flips at 65.9% in the first quarter of 2026, against 25.4% nationally. ATTOM ↗ To tell a real rehab from a resale between associates, a reviewer needs the permit history or the renovation budget. Inference
Sizing the loan
87 of AmeriTrust’s 91 loans closed at exactly 75% or 80% of the recorded price
The buyer’s company applies for a DSCR loan. DSCR stands for debt service coverage ratio: the lender checks whether the rent covers the monthly payment and does not look at the borrower’s own income. FirstLoans brought the AmeriTrust loans in under a business-purpose broker agreement signed in March 2024. National Mortgage Professional ↗ Alleged These loans grew fast in Baltimore, from about 10% of the money lent on single-family rentals in 2019 to about 40%, more than $150 million, in the latest year the Banner measured. Baltimore Banner ↗
- 69at exactly 75%
- 18at exactly 80%
- 4other or not reported
| Item | Amount | Basis |
|---|---|---|
| Recorded purchase price | $217,500 | Within AmeriTrust’s reported $215,000 to $218,000 values |
| Loan to value | 80% | AmeriTrust’s upper tier |
| Loan amount | $174,000 | Matches the reported $172,000 to $174,000 loans |
| Down payment on the settlement statement | $43,500 | Price minus loan |
| Prior sale price | $45,000 | Within the reported $35,000 to $57,000 range |
| Loan as a share of the prior sale | 387% | $174,000 ÷ $45,000 |
On these numbers the loan by itself pays the selling side nearly four times what the house sold for a few months earlier. On paper the buyers put down more than $4.7 million. AmeriTrust says some of that money went back to them through “sham renovation invoices,” improper payouts at closing or other routes, though the coverage of the complaint does not trace any single transaction. National Mortgage Professional ↗ A buyer who gets the down payment back has none of their own money in the house. Inference
The 2021 criminal case shows how that looks on paper. The settlement statement listed a $1,931,545.96 down payment as the buyer’s own money. It came from an unrelated third party, and about $2 million was later wired back to that party through Rappaport’s attorney trust account. U.S. Attorney’s Office ↗ Conviction
Value, prior sale and rent
Houses that had sold for $35,000 to $57,000 appraised at $215,000 to $218,000, with no prior sale listed
AmeriTrust’s complaint calls the reports “fraudulent, pre-prepared appraisals and title reports.” HousingWire ↗ Two appraisers did all of them. Jason Taylor or Christopher Actie signed every appraisal in AmeriTrust’s exhibit, and one of them appraised every property in the 88 confidential loan files the Banner obtained. National Mortgage Professional ↗ Baltimore Banner ↗ Both are defendants in both lawsuits. Neither answered the Banner’s requests for comment, and as of October 9, 2026 neither had been charged with a crime or publicly disciplined over these files.
Appraisal reportOne-unit, Baltimore City
- Client
- FirstLoans Inc. Ordered through an AMC in the broker’s name, then transferred to AmeriTrust
- Opinion of market value
- $217,500 AmeriTrust’s examples: $215,000 to $218,000
- Prior sales and transfers, 36 months
- None The report’s statement, as alleged
- Comparable sales
- Three recent sales near the subject Source of the comps not described in the coverage
- Market rent
- Not public The figure a DSCR loan qualifies on
- Ordering
- Value
- Prior sale
- Comps
- Rent
FirstLoans, the broker, ordered the appraisal through an appraisal management company. The report was made out to FirstLoans and later transferred to AmeriTrust, so the lender never picked the appraiser. Alleged
In the three examples AmeriTrust gives, the appraisals came in at $215,000 to $218,000 on houses that had sold for $35,000 to $57,000 shortly before. Alleged
Each report said the house had not sold or been listed in the past 36 months, though it had sold months earlier. AmeriTrust says the appraisers either left those sales out on purpose or did not do the research. The deed was a public record in Baltimore City land records. Alleged
The coverage does not say which comparable sales the reports used. Once enough insider resales were recorded at $200,000 or more, the next appraiser could cite them as comparable sales. Inference
On a DSCR loan, the appraiser’s rent estimate decides whether the loan qualifies. The rents in the Baltimore reports are not public. The calculator below shows how much that number matters.
USPAP, the Uniform Standards of Professional Appraisal Practice, is the rulebook licensed appraisers work under. Its Standards Rule 1-5(b) speaks most directly to a house that resells fast between related parties: the appraiser has to analyze every sale of the house in the prior three years. The text below is from the 2020-2021 edition. The current 2024 edition is not posted publicly. Appraisal Foundation ↗
“When the value opinion to be developed is market value, an appraiser must, if such information is available to the appraiser in the normal course of business: (a) analyze all agreements of sale, options, and listings of the subject property current as of the effective date of the appraisal; and (b) analyze all sales of the subject property that occurred within the three (3) years prior to the effective date of the appraisal.”USPAP Standards Rule 1-5, 2020-2021 edition Text ↗
Inflated sales can then prop up later appraisals. Hornik said the Baltimore scheme worked “by recycling properties among related parties at inflated prices,” “artificially creating market comps and misrepresenting equity positions.” Private Lender Link ↗ In Philadelphia, a listing at $850,000 used the agent’s own inflated sales as comparables (chapter 12). Philadelphia Inquirer ↗
At the starting settings, interest on $174,000 at 8.5% is $1,233 a month. With taxes and insurance the payment is $1,483. The tenant pays $1,300, which covers 0.88 of it. The loan works on paper only if the appraiser puts market rent about 14% above what tenants in similar houses were paying, or if the program accepts a ratio below 1.00. Illustrative
The closing table
The lender’s money paid for most of the markup
REXTAR Title Services handled every closing in AmeriTrust’s exhibit. The complaint says its title reports, like the appraisals, left out the recent cheap sales. Fidelity National Title issued the title policies and the closing protection letters, a title insurer’s promise to cover the lender if the closing agent mishandles the money. Gold signed every buyer’s settlement statement, and at closing the loan money went to the selling company. National Mortgage Professional ↗ Alleged
Across AmeriTrust’s 91 loans, on these assumptions, the lender’s money would have covered about $11.7 million of markup. Inference In each case the earlier deed was already in Baltimore City land records at closing, which is where a title search looks.
In the 2021 case, Rappaport drafted the contracts and moved the money through his attorney trust account in a way that hid both the real price and where the down payment came from. His co-conspirators took $2,921,604.09 through that account, and Rappaport kept $5,500. U.S. Attorney’s Office ↗ Conviction The Justice Department’s announcement does not mention appraisers or appraisals.
The second look
Reviewers flagged the values in the Banner’s sample as high risk, and the lender approved all 88 files
- 88files, two appraisers
- Flaggedrepeatedly, as high risk
- 88approved
We could not find where the Banner named the lender behind those 88 files. Baltimore Banner ↗ It did name lenders that kept lending as the business came apart, including RCN Capital and Loan Funder. One Maryland lender stopped when its software could not verify a borrower’s bank statement. Roc Capital, through Loan Funder LLC, financed at least $35 million on at least 224 homes, and about 70% of them are now in foreclosure. Baltimore Banner ↗
Roc’s Eric Abramovich said “valuation problems” are widespread and “could be forming a bubble,” adding: “There are gaping holes in the way that business is being done today.” John Beacham of Toorak Capital called valuation “broken fundamentally” and said repeat use of the same appraisers “lends itself to fraud.” Baltimore Banner ↗ In June 2026 the National Private Lenders Association published a proposed way to check values. It is a recommended practice and “not a mandate,” and the association itself says second-look valuations often confirm the first appraisal “without meaningful verification.” Private Lender Link ↗
From sale to auction
The loans were sold, stopped paying within a few months and came back to AmeriTrust
AmeriTrust sold the loans to investors soon after making them. National Mortgage Professional ↗ A lender that sells right away earns its money at the sale, and after that its main risk is being forced to buy a bad loan back. Inference According to Hornik, the scheme came to light when an institutional investor “noticed inconsistencies in valuations and triggered loan repurchase clauses.” Private Lender Link ↗
- 07
Funding
AmeriTrust makes the loan and sells it to an investor soon after.
Alleged - 08
First payments
The borrower misses the first few payments. AmeriTrust says the buyer “had no intention of ever repaying the loan.”
Alleged - 09
Repurchase
The investor uses its early-payment-default clause to make AmeriTrust buy the loan back. AmeriTrust says it has bought back “one or more” loans and is working through other demands.
Alleged - 10
Bankruptcy
Levy Ventures LLC, one of Gold’s companies, files for Chapter 11 on March 5, 2025. Lenders win court permission to proceed against Baltimore properties, and the case is dismissed at Levy’s own request on February 27, 2026.
Court record - 11
Auction
At a July 2025 courthouse auction, lenders put foreclosed Gold properties up for sale and nobody bids.
Reported
- Loan funded$174,000
- Collateral at about the pre-flip price$45,000
- Foreclosure, holding and resale costs−$15,000
- Recovery$30,000
- Loss$144,000
Loss of about 83% of the loan amount
More than half of the linked homes had not paid a water bill in a year or more, together owing over $1.5 million, and 89 were on the city’s vacant list. Baltimore Banner ↗ AmeriTrust says squatters moved into abandoned homes tied to the loans. HousingWire ↗ On North Carey Street, the sheriff evicted one household in July, sooner than the household expected from the foreclosure timeline. In another Gold bankruptcy, Eidlisz’s company won court approval to manage more than 200 Gold properties for $227,000 in one-time fees plus $24,000 a month. Baltimore Banner ↗
AmeriTrust’s $14,076,000 is the total it originally lent on the 91 loans. How much it recovered, and so what it actually lost, has not been reported. On July 22, 2026, Union Home Mortgage bought AmeriTrust’s origination business, including its branches, broker relationships and staff. Union Home Mortgage ↗ We found no source connecting that sale to the Baltimore losses.
Where it could have stopped
Eleven warning signs in the file, who was supposed to act on each, and what they did
At each of these points the warning was already in the file or the public record, and someone had the job of catching it. Pick one to see who.
01Land records
- Signal available
- A deed showing the house sold for $35,000 to $57,000 months earlier
- Whose job
- Title company, appraiser, lender
- What happened
- Left out of the title reports and appraisals
02Prior-sale analysis
- Signal available
- The same deed, which USPAP requires the appraiser to analyze
- Whose job
- Appraiser
- What happened
- Reports said the house had not sold in 36 months
03Related parties
- Signal available
- Buyer and seller companies registered to associated people; EGBE Ventures formed at Eidlisz’s home address
- Whose job
- Lender, title company
- What happened
- Deeds recorded as “arms length”
04Appraiser concentration
- Signal available
- The same two appraisers on every file from one investor group
- Whose job
- Lender, appraisal management company
- What happened
- Nobody acted on it
05Ordering channel
- Signal available
- Appraisals ordered by the broker, then handed to the lender
- Whose job
- Lender
- What happened
- Accepted
06Third-party review
- Signal available
- Reviewers flagged the values as high risk
- Whose job
- Lender
- What happened
- All 88 files in the Banner’s sample approved
07Leverage pattern
- Signal available
- 87 of 91 loans at exactly 75% or 80% of the price
- Whose job
- Lender, loan buyer
- What happened
- Funded and sold
08Permit history
- Signal available
- No renovation permit since at least 2019 on more than 70% of the linked homes
- Whose job
- Appraiser, lender
- What happened
- Values that assumed renovated, rent-ready houses
09Source of funds
- Signal available
- Down payments that went back to the buyers through invoices or payouts
- Whose job
- Lender, settlement agent
- What happened
- Not traced
10Bank statements
- Signal available
- One lender’s software could not verify a bank statement
- Whose job
- Lender
- What happened
- That lender stopped; the others kept lending
11Early payment default
- Signal available
- Missed first payments
- Whose job
- Loan buyer
- What happened
- Demanded buybacks
Taken together, the checkpoints point to seven problems. Everything the lender used to judge the house, the price, the appraisal and the title report, came from people working with the investor group, according to the complaint, and the lender’s one independent check was a review it overrode. The broker controlled who appraised the house. The earlier sale was public and still left out. Reviewers could flag a file but could not stop it. The lender sold its loans soon after making them, so the losses showed up later as buyback demands. With no check on the borrower’s income, the appraisal’s value and rent decided both how much to lend and whether the loan qualified. And discipline, where it came at all, came years late, which chapters 10 and 11 cover.
Public trust
Appraisal standards protect the people who rely on a value, and here those people never chose the appraiser
“The purpose of the Uniform Standards of Professional Appraisal Practice (USPAP) is to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers.”USPAP Preamble, 2020-2021 edition Text ↗
USPAP’s Ethics Rule says an appraiser “must promote and preserve the public trust inherent in appraisal practice” and “must perform assignments with impartiality, objectivity, and independence,” as quoted in a Lincoln Institute course text. Lincoln Institute ↗ All the quotations in this chapter come from the 2020-2021 edition. The 2024 edition took effect January 1, 2024, “does not have a fixed expiration date” and is not posted publicly, so check any passage against a 2024 copy before citing it as current. ISA ↗
An appraiser works for a client, and the Preamble says the standards are there for everyone who relies on the work. Here the client on the report was the broker. AmeriTrust got the reports secondhand, and the investors who bought the loans only ever saw the file. Neither hired the appraiser, and both put money on the value. Inference
- Preamble
to promote and maintain a high level of public trust in appraisal practice
The lenders and loan buyers who relied on these values did not order the reports. The broker did.
Alleged - Ethics Rule, Conduct
must not perform an assignment with bias
One of the same two appraisers did every sampled file from one investor group, all through one broker. That pattern alone does not prove bias.
Reported - Ethics Rule, Conduct
must not agree to perform an assignment that includes the reporting of predetermined opinions and conclusions
AmeriTrust calls the reports “pre-prepared.” They came in at $215,000 to $218,000, close to resale prices of about $200,000.
Alleged - Ethics Rule, Conduct
must not communicate assignment results with the intent to mislead or to defraud
AmeriTrust says the appraisers either left out the earlier sales on purpose or did not do the research. A court decides which.
Alleged - Ethics Rule, Management
contingent on any of the following: 1. the reporting of a predetermined result
Nothing we found says how the appraisers were paid.
Not in the record - SR 1-5(b)
analyze all sales of the subject property that occurred within the three (3) years prior to the effective date of the appraisal
The reports said no sale or listing in 36 months. The houses had sold for $35,000 to $57,000 months earlier.
Alleged
Of the six, SR 1-5(b) is the easiest to test, because it turns on a public fact: whether the house sold in the past three years. The conduct rules turn on bias and intent, which only a court or a licensing board can find.
Appraisal independence rules cover consumer home loans only
| Rule | Consumer loan on a principal dwelling | Business-purpose DSCR loan |
|---|---|---|
| Appraisal independence rule, Reg Z 1026.42(c) | Applies | Does not apply |
| Duty to refer a USPAP failure to the state board, 1026.42(g) | Required of a covered person | Voluntary |
| TILA and RESPA | Apply | Exempt |
| FIRREA Title XI | Federally related transactions only | Mortgage bankers and brokers not included |
| ECOA and Regulation B appraisal copy | Applies | Applies on first-lien dwelling loans |
The federal rule against pressuring appraisers sits in Regulation Z, and it “applies to any consumer credit transaction secured by the consumer’s principal dwelling.” It bars anyone covered from pushing a value away from the appraiser’s independent judgment. Section 1026.42(g) adds that a covered party who reasonably believes an appraiser materially broke USPAP must report it to the state appraiser board. 12 CFR 1026.42 ↗ A DSCR loan to a company buying a rental is a business loan, and business loans are exempt from TILA and RESPA, the main consumer mortgage laws. California Mortgage Association ↗ The 1989 federal appraisal law, FIRREA Title XI, covers only federally related transactions. As GAO put it in 2004, “Real estate transactions of mortgage bankers, brokers, pension funds, and insurance companies are not included.” GAO-04-580T ↗ As we read it, neither the anti-pressure rule nor the duty to report reaches a DSCR lender, so reporting an appraiser to the state is up to the lender. Inference
In October Research surveys, 55% of appraisers said they had been pressured to “hit the number” in 2003, and 90% said so in 2007, with the pressure coming from brokers, lenders, agents and homeowners. RISMedia ↗ A 2007 New York Attorney General investigation led Fannie Mae and Freddie Mac to agree to new appraisal rules in March 2008, and the Home Valuation Code of Conduct took effect May 1, 2009. Center for Public Integrity ↗ Dodd-Frank then wrote appraisal independence into the Truth in Lending Act, and Regulation Z section 1026.42 carries it out for consumer loans. In the 2000s the pressure mostly came from lenders making home loans. In Baltimore the appraisals AmeriTrust calls pre-prepared came through the borrower’s side of the deal, from one investor group and one broker, on business loans those rules do not cover. Inference
Enforcement
A state board can fine an appraiser up to $5,000 after a sworn complaint, and the lenders used private lists instead
USPAP has no enforcement arm of its own. States license appraisers and discipline them, and a small federal agency, the Appraisal Subcommittee, checks whether each state’s program meets Title XI. In Maryland the appraiser commission acts when “any person” files a complaint on its forms, signed under oath, with a copy of the report. Maryland complaint process ↗
- 01
Report in hand
OptionalWhoever holds the report, whether a lender, a loan buyer or a reviewer, decides whether to file. On a business loan no federal rule requires it.
- 02
Sworn complaint
Day 0Filed on the Commission’s forms, under oath, with the report attached. The appraiser sees who filed.
- 03
Response
30 daysThe appraiser has 30 days to answer.
- 04
Technical review
6 to 12 monthsAn expert reviews the report. In 2009 that work fell almost entirely to one part-time volunteer.
- 05
Hearing
4 to 6 monthsCharges go to an administrative law judge or a three-member panel. Getting a hearing date often took months.
- 06
Outcome
Fine up to $5,000Dismissal, a consent order, a reprimand, suspension, revocation or a fine. The Commission “lacks the authority to order the reimbursement of any monies.”
The legislature’s 2009 review of the commission counted 50 to 75 complaints a year from 2005 to 2008. Of the 190 filed from 2005 to 2007, 52, or 27%, were still open a year later. The technical reviews depended almost entirely on one part-time volunteer, the budget for paid experts was about $6,000 a year or less, and the executive director’s job was eliminated in October 2008. Department of Legislative Services ↗ The fines are small: Maryland’s 2025 discipline list shows penalties of $250 to $1,000. Maryland 2025 actions ↗ Complaints stay private until there is a final order, and no order tied to the Baltimore files has been published, so we cannot tell whether any lender filed one.
The federal check on state boards
Those figures are from GAO’s 2004 testimony on Title XI, which also found that the Appraisal Subcommittee’s only compliance tool, decertifying a state program, was “so severe” it had never been used. GAO-04-580T ↗ Today the Subcommittee’s standard is that “States must resolve all complaints filed against appraisers within one year (12 months).” ASC ↗
The Appraisal Subcommittee finds Maryland out of compliance with Title XI for resolving complaints too slowly: 53 complaints open, 22 of them more than a year old. Source ↗
Pennsylvania is rated Good, with 3,053 credentialed appraisers. It has six aged complaints, two over one year and two over two years without documented special circumstances, and has added an enforcement attorney. Source ↗
The Subcommittee issues a final compliance review of Maryland. We could not retrieve the document. Source ↗
- 14“No disciplinary actions taken”
- 3actions listed
- 9not reviewed
The three actions we found were a $2,000 fine for failing to exercise reasonable diligence, followed by a suspension when it went unpaid; a $5,000 fine plus $2,000 in costs and 35 hours of education for an appraisal that broke USPAP; and a $2,000 fine for appraising commercial property without a general certificate. January 2025 ↗ April 2025 ↗ April 2026 ↗ None involves the Temple-area deals.
Lenders turned to private blacklists
| Feature | Maryland appraiser commission | Private exclusion list |
|---|---|---|
| Who can start it | Any person, by sworn complaint with the report attached | The lender or association that keeps the list |
| Public record | Published once there is a final order | Names not published; the Watchlist is members-only |
| Due process | 30 days to respond; charges heard by a judge or a panel | No appeal or correction process described |
| Reach | The license, for every client in the state | One lender, or the association’s members |
| Money | A fine of not more than $5,000; no restitution | No fine; the lender stops accepting the appraiser’s work |
| Speed | 27% of 2005 to 2007 complaints ran past a year | In place by June 2025, about three years after the buying began |
By June 2025 at least five Wall Street-backed lenders had blacklisted the buyers and people around them, including Lerner, Taylor and Actie. Baltimore Banner ↗ In July 2025 one unnamed non-QM lender barred 31 appraisers and 59 borrowers or companies, and another barred 49 appraisers and nearly 200 borrowers or companies. Neither published the appraisers’ names. National Mortgage Professional ↗ That same month Hornik announced a planned shared list that would include “bad appraisers who are giving bad values.” Mortgage Professional America ↗ The NPLA Watchlist, launched December 1, 2025, is a members-only site that takes confidential and anonymous tips, and its launch materials describe no way for someone listed to appeal or correct an entry. NPLA ↗ Hornik said it “doesn’t tell you not to do a deal.” Mortgage Professional America ↗ We found no published legal analysis of what shared blacklists like these risk under defamation, antitrust, credit-reporting or fair-lending law.
A private list binds only the lender that keeps it. An appraiser dropped by one lender can keep working for others, and without a complaint to the state board the license stays clean, which fits a Baltimore timeline that ran from 2021 to 2025. Inference In 2009 such lists ran the other way: Amerisave kept an “ineligible appraiser list” of close to 12,000 names and Countrywide one of more than 2,000, made up of appraisers who would not deliver the values asked for, according to the Center for Public Integrity. Center for Public Integrity ↗
42 homes bought for $3,675,000 and resold the same day for $6,930,000
ConvictionThe sponsor group’s Baltimore buying begins
ReportedFirstLoans signs AmeriTrust’s broker agreement
AllegedLenders pause Baltimore DSCR lending
ReportedAt least five Wall Street-backed lenders have blacklisted the group and its appraisers
ReportedTwo unnamed non-QM lenders circulate exclusion lists covering 31 and 49 appraisers
ReportedThe Baltimore Banner publishes its investigation
ReportedBaltimore City opens a fair housing investigation
ReportedThe National Private Lenders Association launches its members-only Watchlist
ReportedAttorney Jacob Rappaport sentenced to 15 months
ConvictionAmeriTrust files 1:26-cv-03574
Court recordCommercial Lender LLC and RCN Capital file 1:26-cv-03725
Court recordWholesaler Alexander Schultz sentenced to two months
ReportedNo public appraiser board action tied to these files
Reported
Reports that lenders pulled out of Baltimore all rely on unnamed lenders, and no lender has publicly said it stopped lending in the city. The fraud’s effect is also hard to separate from another one: Maryland licensing guidance in January 2025 led some lenders to suspend Maryland business until the legislature reversed it, according to a July 2025 trade column. Mortgage News Daily ↗
A related pattern
In Philadelphia the recorded prices ran about double the asking price, and an appraiser says he refused the number
Near Temple University, the Philadelphia Inquirer found a similar pattern with a different way of inflating the price. Nobody has been charged, and no lender had filed a racketeering suit as of October 9, 2026. Pat Fay, the agent at the center of the reporting, has denied manipulating any appraisal. Philadelphia Inquirer ↗ Reported
- Sourcing
Owners list apartment buildings and student rentals at normal prices
- Price
The recorded price comes in at about double the asking price. Sellers say they got about what they asked.
- Agent
Pat Fay represented the buyer on about 52 closed or pending sales worth about $45 million
- Appraisal
Appraiser John Sexton says he was pressed to reach $879,000 and found made-up comparable sales and leases. That sale did not close.
- Loans
Mortgages of about $673,000 to $807,000 a property. At least one went into a bond backed by real estate loans.
- Default
Owners stopped paying within months. Four foreclosures were filed by April 3, 2026.
- Recorded on the deed$875,000
- Received by the seller$385,000
The National Private Lenders Association warned members about irregular deals in ZIP codes 19121, 19123 and 19133, according to a December 9, 2025 report, and said the money above the real price was refunded at closing. Mortgage Professional America ↗ By April 3, 2026 the lenders foreclosing included Easy Street Capital and U.S. Bank Trust National Association. Philadelphia Inquirer ↗ The appraisers who signed off on the deals that closed have not been named. The Banner ranked Philadelphia among the ten cities with the highest share of DSCR loan money from 2022 to 2024. Baltimore Banner ↗
From the record
Ten controls, each tied to a checkpoint the Baltimore files passed
- 01
Order every appraisal from the lender’s own panel or management company. When an investor loan arrives with a report the broker ordered, get a review or second appraisal the lender orders itself.
Checkpoint 05 - 02
Before accepting an appraisal, pull the last 36 months of sales from public land records and compare them with what the appraiser and the title report say. If they do not match, stop the file.
Checkpoint 01Checkpoint 02 - 03
When the value is more than double a sale from the past 12 months, require a written account of the work done and what it cost, and check city permit records for it.
Checkpoint 08 - 04
Check whether the buyer and seller companies are connected through registered agents, addresses, signers or members. Treat a sale between connected companies as not arm’s length when setting the value and the loan amount.
Checkpoint 03 - 05
Track how often the same appraiser appears by investor, broker and ZIP code, and send files for field review once a set threshold is crossed.
Checkpoint 04 - 06
Give reviewers the power to stop a file. A high-risk finding needs a reconciled value or a second appraisal, signed off before closing.
Checkpoint 06 - 07
Size DSCR loans on the lower of the actual lease rent and the appraiser’s market rent, and cap how far market rent can run above the lease.
Chapter 05 calculator - 08
Confirm the down payment is in the buyer’s own bank account, and trace closing payouts for renovation invoices and payments to related companies.
Checkpoint 09Checkpoint 10 - 09
When a review confirms a material error, report the appraiser to the state board with the report attached. Maryland acts only on a sworn complaint.
Checkpoint 02 - 10
Watch early payments by investor, broker and appraiser, and stop taking new files from any group whose loans miss first payments.
Checkpoint 11
Five documents would fill gaps in this account: the AmeriTrust complaint and its list of 91 loans; the RCN complaint, to see what it accuses each appraisal management company and Clear Capital of; Baltimore City land records for AmeriTrust’s three example properties; the appraisals themselves, with their comparable sales and rent estimates, if they come out in discovery; and the name of the lender in the Banner’s 88-file sample. Docket 1:26-cv-03574 ↗
Reviewing investor files?
Lenders, reviewers and appraisers working business-purpose loansTell us which of these controls you run today, what a prior-sale mismatch triggers in your shop, and what you have seen in Baltimore or Philadelphia files.→The loan in this article is a composite. Its prices, rent, rate, costs and recovery are illustrative figures built from reported ranges and do not describe any single property. Facts from the AmeriTrust and Commercial Lender complaints are allegations that no court has ruled on, and press accounts describe conduct no court or board has decided. USPAP text is quoted from the 2020-2021 edition. Research is as of October 9, 2026. This article is general information, not legal, compliance or appraisal advice.
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