Baltimore rental properties face FBI investigation over loan defaults
Updated
Updated · thebanner.com · May 6
Baltimore rental properties face FBI investigation over loan defaults
5 articles · Updated · thebanner.com · May 6
Hundreds of homes tied to New York investors are under scrutiny after a 700-plus property portfolio financed with more than $100m in DSCR loans slid into foreclosure.
Baltimore was an early hotspot for the lightly regulated rental-property loans, which made up about a third of such lending there in 2022 before lenders blacklisted some buyers and tightened credit.
Nationwide, DSCR loans reached more than $24bn in 2024, about a fifth of new single-family rental mortgages, while Philadelphia and other poorer postindustrial cities also show rising foreclosures.
DSCR loans fueled a rental investment boom, but are they now creating a foreclosure crisis in America's most vulnerable cities?
With the FBI probing investor deals, how vulnerable is the $2 trillion private credit market to large-scale real estate fraud?
Between 2025 and 2026, federal and Baltimore city authorities investigated investors Eluzer Gold, Nachum Dirnfeld, and Shraga Lerner for real estate fraud involving over 700 Baltimore homes. The investors exploited DSCR loans by inflating property appraisals and diverting funds, leading to widespread foreclosures that surged 26% in late 2025. These foreclosures caused tenant displacement, especially in majority-Black neighborhoods, worsening housing instability and accelerating neighborhood blight. The crisis triggered a credit freeze as financiers halted DSCR lending, stalling legitimate investments and deepening the affordable housing shortage. In response, legal actions, rental assistance, and redevelopment efforts were launched, while the case sparked a national debate on regulating DSCR loans and private lending practices.