The Baltimore case is not a story about a bad loan product. It’s a story about checks that got skipped. Between 2022 and 2024, a small group of investors allegedly used DSCR loans to borrow against Baltimore rowhomes at three to four times what they had just paid for them, then let the loans default. Two lender lawsuits filed in September 2026 claim more than $24 million in losses. Reporting puts the group’s total DSCR borrowing near $100 million across roughly 700 properties.

Everything below about the people involved comes from court filings and news reporting. These are allegations. None of it has been proven in court.

What happened in Baltimore?

The pattern described in the lawsuits and in local reporting is simple:

  1. A shell company buys a distressed rowhome for $40,000 to $60,000.
  2. Days or weeks later, it sells the home to a different LLC tied to an associate, at three to four times the price.
  3. The buying LLC takes out a DSCR loan backed by an inflated appraisal, allegedly with doctored or fake photos, and with the prior sale left off the application.
  4. The cash comes out at closing. No renovation happens. Most of the properties never had a permit pulled.
  5. The loan defaults, and the lender forecloses on a house worth a fraction of what it lent.

One example from the Realtor.com article: a house on North Bond Street bought for $43,000 in May 2022, sold to a related LLC for $310,000 in July 2023, foreclosed, and relisted in August 2026 for $35,000.

The two federal suits:

Both allege civil RICO violations. The cost doesn’t stop with the lenders. Tenants have been displaced, and most of the homes sit in majority-Black neighborhoods already hit hard by vacancy. Baltimore City ranked fifth in the country for per-capita foreclosures in ATTOM’s August 2026 data.

Why were DSCR loans the target?

A DSCR loan qualifies on the property’s rent, not the borrower’s personal income. That’s the whole point of the product, and for real investors it works. But two features made it easy to abuse at scale.

Most DSCR loans close in an LLC and don’t report to personal credit. When that borrower applies for the next loan, the new lender usually sees their personal credit and what they own personally, like a primary residence. Properties held in LLCs often never come up. That’s how one group can stack hundreds of loans across lenders who each see only their own file.

DSCR underwriting doesn’t ask the conventional questions. A conventional lender wants to know how many other properties you have financed and how leveraged you are. DSCR, by design, focuses on the property in front of it. For an honest investor with a growing portfolio, that’s a feature. For someone running a scheme, it’s a gap.

Neither feature caused the fraud. Skipped checks did.

What red flags should have stopped these loans?

Any one of these should trigger a hard look. In Baltimore, the reporting suggests many of them showed up together, file after file.

Should DSCR brokers be licensed?

Yes. In many states, brokering a business-purpose loan doesn’t require a mortgage license, because business-purpose lending sits under a long-standing exception to mortgage licensing rules. My view: anyone brokering DSCR loans should, at minimum, be licensed. Where they aren’t, lenders have to be far more discerning about who is sending them files and what those files look like.

A license doesn’t make anyone honest. It does mean a background check, a regulator, a public record on NMLS Consumer Access, and something to lose. Olympus Financial is licensed under NMLS #2469800 in Florida, Colorado, Georgia, Texas, and Illinois, and every loan officer here carries an individual NMLS number you can look up.

What does a clean DSCR loan look like?

If you’re an investor, expect a careful lender to ask for the items below. They aren’t hoops. They’re what separates a real file from a Baltimore file.

What the lender asks forWhy it matters
Entity documents: articles of organization, operating agreement, EINConfirms who owns and controls the borrowing LLC.
A full schedule of real estate owned, including LLC-held propertiesShows total leverage that personal credit won’t.
Purchase history and chain of titleCatches related-party flips and missing prior sales.
An appraisal with comparable sales that support the valueThe value has to be real, not just written down.
Proof of improvements on a recent purchase: permits, invoices, photosExplains any increase in value since you bought.
A lease, or the appraiser’s market rent schedule on a vacant unitRent is what qualifies the loan.
Personal guaranty and a credit report on the guarantorTies a real person to the loan.
Reserves, shown on bank or asset statementsShows the property can carry itself through a vacancy.

If you bought recently and want to borrow against a higher value, bring the paper trail with you. A real renovation backed by permits and invoices is exactly the kind of file lenders want to fund.

One more thing to keep straight: DSCR loans are business-purpose credit for non-owner-occupied rental property. You can’t live in it. Occupying the property more than 14 days a year can take it out of business-purpose lending entirely.

Is DSCR still a good tool?

For a solid investor, a DSCR loan can be a lifesaver. The great majority of people using them are just trying to build a rental portfolio: self-employed owners whose tax returns don’t reflect what they earn, investors who have outgrown conventional limits, people buying a first rental before they own a home. Baltimore doesn’t change any of that.

What it will likely change is how hard lenders look at recent purchases, fast value increases, and borrowers with large LLC portfolios. For a clean file, that’s fine. A few more questions up front cost you a few days. A market full of fraud costs everyone more: tighter guidelines, worse pricing, fewer lenders.

Have a rental you want to finance?

Send us the scenario. We’ll tell you up front what the file needs. See how our DSCR loans work

Sources