The DSCR Fraud Scandal That’s Shaking the Market and What It Means for Investors

What every real estate investor should know about the latest DSCR loan scheme, how it’s impacting the market, and where opportunities still exist.

If you’re investing in the DMV area, you’ve likely heard about the recent fraud scandal that’s rocked the real estate investing world and disrupted the DSCR loan market.

What Happened in the DSCR Loan Fraud Scheme

A group of investors, appraisers, an appraisal management company (AMC), and possibly a title company orchestrated a scheme to inflate property values and secure DSCR loans under false pretenses.

The fraud impacted an estimated 500–800 loans totaling between $200–300 million. Most of the activity occurred in Baltimore, with additional cases suspected in parts of New Jersey and Brooklyn, NY.

The scheme worked like this:

• Properties were repeatedly sold between connected parties at inflated prices.
• Sale proceeds were recycled as “down payments” that never truly changed hands.
• No real renovations were made, yet each inflated transaction reset the property’s “as-is” value.
• Appraisers submitted falsified reports with fake renovation photos.
• The AMC involved ensured only certain appraisers were assigned, masking collusion.

The scam unraveled when an Apollo-backed firm noticed multiple appraisal invoices for exactly $444 — all tied to the same appraisers and sponsors. That discovery triggered a wider investigation, and the full repercussions are expected to unfold in the months ahead.

How This Impacts Real Estate Investors

Some lenders have already paused lending in Baltimore as a result of the fraud fallout.
But WCP is still lending — both fix and flip and DSCR — in Baltimore City.

That said, investors should expect more scrutiny on:

• Properties that have recently traded hands
• DSCR cash-out refinances on homes with minimal rehab work
• Appraisal reports that seem inconsistent with true property condition

If you’re investing in Baltimore, keep an eye out for a potential surge in auction properties. Many of these distressed assets are likely connected to this scheme — which could temporarily impact comps and put downward pressure on nearby property values.

Still, these same conditions may create strong opportunities for informed investors ready to buy carefully and leverage transparent, trustworthy private lending.

Talk to Washington Capital Partners about your Baltimore deals before you make your next move.

How to Start Flipping Without a Ton of Cash

You don’t need deep pockets to start investing in real estate. Many successful investors begin with simple “lipstick” renovations — paint, floors, and basic cosmetic updates that quickly add value without the cost or risk of a full renovation.

Start small. Focus on low-risk cosmetic updates, build confidence, and grow from there. The key is to start.

When you’re selecting your first investment property:

• Look for homes that need surface-level updates.
• Focus on areas with strong comps and low carrying costs.
• Partner with a private lender who’s willing to meet you where you’re at.

Pro tip: Your first flip doesn’t have to be your dream flip. It just has to get you in the game.

Let’s Build Your Game Plan →