A New York State investor group is at the center of a burgeoning foreclosure crisis in Baltimore, according to an investigative report from The Baltimore Banner.
The group, EGBE Ventures, purchased more than 700 long-term rental properties above market value using debt service coverage ratio (DSCR) loans from at least 24 private lenders, including AmeriTrust Mortgage Corp. and RCN Capital.
However, EGBE Ventures has stopped paying those loans on half of those properties, which are now in foreclosure. The tenants in those properties, the Banner said, were unaware of the issue until they received foreclosure notices on their doors.
The group, which has operated under several names including B&H Ventures, Zahav Ventures, Kesef Ventures and Gelt Ventures, began purchasing homes in 2017. Financial issues quickly arose when founder Benjamin Eidlisz’s former business partner, Benjamin “Bruce” Sherr, accused him of falsifying documents and misusing business funds. Sherr left the company in 2020, leading Eidlisz to find a new partner, Eluzer Gold.
Eidlisz and Gold purchased more than 500 properties in 2022 using DSCR loans, a “hard money” loan that primarily relies on rental income projections for approval. The cracks in EGBE began showing in 2023, as a growing number of their properties, which were in majority Black neighborhoods, went under foreclosure. A number of their properties went to auction in July, but didn’t garner any bidders.
Lincoln Institute of Land Policy President and CEO George McCarthy told The Banner that the implosion of EGBE Venture’s portfolio shows the need for better regulation on DSCR loans. However, the damage is already done in Baltimore, which is on the precipice of a DSCR-induced foreclosure boom.
“Who’s going to pull away the punch bowl when things are going well?” he said. “From the average investor’s point of view, that’s a neighborhood they’re just not going to touch now.”
Foreclosures on the rise across the country
Baltimore isn’t the only market struggling with rising foreclosure rates, according to Realtor.com.
The national foreclosure rate has risen 20 percent year-over-year, with 101,513 U.S. properties going under foreclosure during the third quarter. ATTOM, which provided the data, said that number includes properties in all stages of foreclosure, including “default and notice of default; notice of foreclosure; and real estate owned or REO properties, defined as properties that have been foreclosed on and repurchased by a bank.”
Florida had the highest foreclosure rates in Q3, with Lakeland (1 in every 470 housing units), Cape Coral (1 in 589), and Ocala (1 in 665) leading the way in defaults in metros with populations above 200,000. Columbia, South Carolina (1 in 506) and Cleveland (1 in 593) also made the top five.
“A huge percentage of Florida’s residents are retired on fixed incomes, and [HOA] increases are completely unaffordable,” real estate investor Jameson Tyler Drew told the portal. “This has led to a fire sale of condos as elderly residents look for places to live, all while losing their equity.”
Added Realtor.com Senior Economic Research Analyst Hannah Jones, “Foreclosure rates in Florida may be relatively high due to some combination of surging insurance premiums, climbing HOA fees, and falling buyer demand. Additionally, many homeowners who were protected by pandemic-era forbearance or relief programs are now facing resumed payments they can’t afford in light of rising HOA and insurance costs.”
Regarding the fallout in Baltimore, state legislators told Realtor.com, which was the second to cover the news, that they’re tracking EGBE-purchased properties and are committed to helping affected tenants.
“At this time, it appears this activity is not representative of the overall Baltimore home acquisition and renovation market,” Maryland Secretary of Housing and Community Development Jake Day told the portal. “This predatory scheme won’t deter us from our 15-year vision to eliminate vacancy in Baltimore.”
