The loan at the heart of a new foreclosure crisis

9:38Hallie Miller:essentially making loans to mom-and-pop real estate investors. And we thought to ourselves, hey, this is a great opportunity.

9:45Jack Bologna:And so when we started our business, the idea was to connect Main Street to Wall Street. Eric's company started connecting Fix & Flippers to Wall Street. Eric is a finance guy. He used to run a hedge fund, and he knows there is a lot of money out there on Wall Street. You could even say a giant pool of money. Thanks to Eric's company, the money from pension funds and insurance companies and sovereign wealth funds started flowing into the fix-and-flip market and helped to supersize it. Now, at first, these loans were mostly short-term loans, because, you know, it shouldn't take more than a year or two to fix and flip a home.

10:24Jack Bologna:But as more and more Wall Street money started flowing in, private lenders realized they could now make longer-term loans. They could issue 30-year mortgages. And the private lenders thought that these 30-year mortgages could attract a much bigger market. These longer-term mortgages would be perfect for landlords. This was the big innovation, and these longer-term mortgages for landlords would soon be called DSCR loans. Around 2018, Eric's company started to get into them. Do you remember some of the first types of this loan you were doing? Oh, sure.

11:00Hallie Miller:I mean, they sort of sold like hotcakes. I mean, they were very popular loans.

11:06Jack Bologna:This is the moment when DSCR loans go mainstream. Wall Street loved DSCR loans because lenders could charge a higher interest rate compared to a traditional mortgage. And landlords liked these loans because the borrowing process was so much easier. You didn't have to bring your W-2 or prove years of income history. Lenders didn't really care about how much money you had been making or even how much money you made that year. Why shouldn't the bank be looking at how much money I'm making?

11:35Hallie Miller:It doesn't not make sense to look at one's income, but it's not necessary. You only really need to focus on the income of the property to make the loan against that property, right, for a DSCR loan.

11:45Jack Bologna:Eric says DSCR loans are business-type loans, so they operate on business logic. For DSCR loans, the main things that private lenders focus on are the landlord's credit score and the appraisal report, which shows how much the home is worth and the estimated monthly rent. Basically, if the lender thinks that the estimated rental income for this home will cover the mortgage payments, it will approve the loan. Eric says this is the same logic behind the loans that big-time developers get to build office towers and apartment complexes. The bank mainly cares about whether the income from the project will cover the debt payments.

12:23Jack Bologna:That's why private lenders started calling these new mortgages debt-service-coverage-ratio loans. Over the past couple years, these DSCR loans have soared in popularity. Eric says most of the people taking them out are mom-and-pop landlords. And now DSCR loans are one of America's hottest new mortgage products. In 2021, lenders originated about$20 billion worth of these loans. In 2025, that number more than doubled to about$50 billion. And a lot of that money was flowing from all over into Baltimore. These mortgage lenders are all based across the country. You know, Florida, California, New York.

13:02Jack Bologna:To unravel the mystery of who amassed the massive 700-home real estate portfolio in Baltimore, how they borrowed$100 million so quickly, Jack and Hallie went through the property records. They found that these loans came from dozens of different private lenders with names like Cake Mortgage and Loan Funder LLC. Loan Funder is actually connected to Rock 360, to Eric's company. Jack says he was surprised at how simple and fast this process seems to be. This is like all done electronically or via phone. They advertise on their websites. They're like, see how easy it is to get a loan today. And in theory, there is no limit to how many houses you can buy through DSCR loans.

13:45Jack Bologna:A fact that two mysterious landlords from New York were taking full advantage of. And then, starting in late 2024, everything comes crashing down. So they're kind of building this portfolio over a couple years, and then they almost all start going through foreclosure at the same time. Companies associated with one of the landlords declare bankruptcy. And as Jack and Hallie combed through the records from those companies, they begin to notice some suspicious patterns. First of all, they noticed that a lot of these homes weren't actually getting rented out. Hallie finds a very interesting statement in the bankruptcy records.

14:20Hallie Miller:One of the first documents in that docket was, I think, a statement from the LLC itself that said we were only ever able to occupy about a third of the homes.

14:35Jack Bologna:What was your reaction?

14:36Hallie Miller:I remember asking, so why did they keep buying?

14:39Jack Bologna:Yeah, why were these landlords taking out more loans, buying up more and more homes if they couldn't find tenants for the homes they already had? You might make the same mistake once, twice, three times, but you don't make the same mistake 700 times, you know? And then Jack and Hallie noticed something even weirder. These two landlords seemed to be spending way too much money to buy these homes. Like they were paying double or triple what the homes had sold for just a couple years before. Jack and Hallie went out to see some of these homes, and they didn't look recently renovated. They didn't seem to be worth the new higher prices.

15:16Jack Bologna:So who the heck were these people who were coming in and paying way too much money for homes in some of the most distressed neighborhoods in Baltimore? At first, there was one name that stood out. His name was Eliezer Gold. He and his LLCs had bought more than 500 of the homes. And Eliezer was kind of a mysterious figure around Baltimore. People we talked to, they were like, I'd never seen this guy, never heard of him really until now.

15:42Hallie Miller:and to buy 500 homes in Baltimore,

15:47Jack Bologna:you'd think that you'd, you know, be down here more, you know. Jack and Hallie try calling him. They send emails and letters. They reach out to his attorneys. After a few weeks of total silence, they decide that if Eliezer Gold wasn't coming down to Baltimore, then they would have to go to him. It was time for a road trip. That's after the break.

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18:39Jack Bologna:Spring Valley, New York is about an hour north of Manhattan. It's a pretty standard looking suburb. Jack and Hallie pull up at the address they have for Eliezer Gold. It's an address they have seen over and over on hundreds of pieces of paperwork. Turns out to be this multifamily house. It's like 930 in the morning. Jack walks up and starts knocking on the door. Hallie's a couple steps behind.

19:03Hallie Miller:We hear movement. We hear maybe some blinds shuffling from inside the house, like somebody peeking outside the blinds, putting them down.

19:10Jack Bologna:Jack says he hears a side door open. So I kind of rush down to see, like, who's getting out of this house.

19:17Hallie Miller:Then we hear the car behind us start. And the car is kind of, like, backing out, you know.

19:23Jack Bologna:And I'm trying to, like, make eye contact with this driver, being like, hey, like, hello. The driver looks a lot like Eliezer Gold. He looks like the one picture they have of the guy. He was like, you know, 40-ish white guy with a beard and wore black. Jack rushes down the driveway toward the car, a big black SUV.

19:40Hallie Miller:He put himself in front of a moving car and tries to stop the car and tries to get a hold of the driver and is like, hey, wait a minute, like, are you Eliezer Gold?

19:50Jack Bologna:Now, the way Jack tells this story, nobody was ever in real danger. But Hallie says, no, no, no, Jack almost got run over.

19:57Hallie Miller:He probably doesn't want his wife to hear this, but he was definitely in front of the car. Yeah, that's, I don't think he was going to run me over. I think, well, I think if he ran me over, he probably would have had to stop and then we could have interviewed him, you know?

20:11Jack Bologna:Okay, so maybe Jack is trying to block the path of this SUV with his body. But regardless, the driver just swerves around him and takes off. Looks like they are not going to talk to Eliezer Gold. But Eliezer Gold is not the only name that Jack and Hallie had. They put together a list of people and addresses that seem to be related to Eliezer Gold. One of them is named Benjamin Eidless. According to the property records, Benjamin had bought a bunch of homes in Baltimore and eventually sold more than 100 of them to Eliezer Gold. And Benjamin happens to have an address near Spring Valley, New York.

20:47Jack Bologna:He's not home, but the doorbell connects Jack and Hallie to Benjamin's phone. And he agrees to meet them. An hour later, Benjamin pulls up in the parking lot outside his office. And rolls down the window, and we start talking to him, and he's like, he declines to talk on the record. They chat for about five minutes. Jack says it's not much of a conversation. But he and Hallie notice something, something that would turn out to be a big clue. They're standing outside Benjamin's car. We were talking to him through the open window.

21:17Hallie Miller:We see on the console it lights up that he's getting a call from Ellie Gold. Oh!

21:22Jack Bologna:You saw through the window.

21:25Hallie Miller:Yeah, yeah.

21:26Jack Bologna:We learned that Benjamin Eidlish and Eliezer Gold were definitely connected then. In the end, Jack and Hallie would actually find several links between Benjamin Eidlish and Eliezer Gold. In fact, in one of the documents, Eliezer Gold lists his address as the same as Benjamin Eidlish's home address. These clues were a major breakthrough in Jack and Hallie's investigation. They seemed to show that Benjamin Idliss and Eliezer Gold might have an unusually close connection. Jack and Hallie now have this theory for what might have been going on. And it's important to say this is only a theory. You see, there is a type of mortgage scheme out there where two people work together to put one over on the lender or the bank.

22:13Jack Bologna:One person buys a home for pretty cheap. They turn around, sell that home to a close friend. And the trick here is that the friend agrees to buy the home at a super high price, like way higher than the house is actually worth. Maybe they even get an appraiser to say that the house is worth that inflated price. And using that fake price, the friend applies for a really, really big mortgage loan. This scheme where you conspire to convince a lender to loan you a lot of money for a home that is not actually worth a lot of money is a type of fraud. And with DSCR loans, where there's no limit to how many loans you can get, you could, in theory, repeat this fraud over and over and over again.

22:55Jack Bologna:Jack and Hallie say if the two friends repeat this scam hundreds of times, let's say, and if they're able to hide the money that they've pocketed, they could walk away with millions of dollars. So, yeah, one person gets loaded up with a huge amount of debt.

23:09Hallie Miller:And then at some point they just start walking away. They just stop paying the mortgages and all these homes go into foreclosure. But by this point, you've already taken out tens of or maybe even$100 million more in loans to buy up all these homes.

23:23Jack Bologna:Jack and Hallie say a fraudulent home valuation scheme would be especially easy to pull off in Baltimore, where some blocks are in good shape, but others are filled with abandoned, vacant homes. And they all might look the same to the private lenders who don't know Baltimore and who are trying to get these loans done quickly. Last fall, Jack, Hallie, and their colleague Sahana Jayaraman published a series of stories about what's been going on in Baltimore and their suspicions. Though they say it is possible that these landlords were trying their best and just ended up in way over their heads. But recently, they've learned that the FBI has opened an investigation into Eliezer Gold and Benjamin Eidless and others.

24:04Jack Bologna:Also, private lenders have put those names on a blacklist. By the way, we did reach out to Eliezer Gold and Benjamin Eidlis. Neither of them would comment. And okay, one way to look at what happened here is, if this was a scam, well, then it was just a couple of bad actors defrauding some mortgage lenders, right? But maybe some of the responsibility lies with these DSCR loans. Maybe they're a little too easy to get. Lenders rely on appraisal reports, which in some cases can just be one person's guess about how much a house will rent out for. And maybe some of the responsibility also lies with Wall Street.

24:42Jack Bologna:That giant pool of money is maybe too hungry for opportunities to take bigger risks and make bigger profits. And there is a bit of deja vu here, because Wall Street's hunger for risky mortgages is partly why the financial crisis happened. And as a result, we as a society decided that mortgage loans specifically should be less risky. But that was nearly two decades ago. And over the years, Wall Street has slowly rediscovered the allure of riskier, more exotic types of mortgages. Now, we raised these questions with Eric Abramovich, who runs that big private lending operation, who helped popularize these DSCR loans.

25:23Jack Bologna:I feel like there's a flashback to that time of easy credit where banks were handing out mortgages like they were lollipops.

25:32Hallie Miller:Yeah, that's just PTSD. Things are very different today. Most people would argue that credit for housing is still too tight. OK, we made the rules too tight after the financial crisis and it actually caused backlash, right?

25:53Jack Bologna:Eric argues that the U.S. has a housing shortage right now. So people need access to money to build new homes or to fix up old ones. We need Wall Street to keep making that money available in the form of loans, even if some of those loans end up going bad. In Baltimore, Jack and Hallie told us, about$35 million of the$100 million in bad loans came from private lenders associated with Eric's company. Are you aware of what's happening there? How should we think about that situation? that situation.

26:26Hallie Miller:Well, you know, some of the things they say on Wall Street, if you're lending and you have no defaults, you're doing something wrong.

26:35Jack Bologna:Eric said, look, some loans do go bad, but overall across the country, most DSCR loans still seem to be doing fine. And that is what the data show right now. DSCR loans are a small fraction of the overall mortgage market. They They represent like maybe 2 % of new mortgage loans for single-family homes these days. But these loans are rapidly growing in popularity. And if they become a much bigger part of the mortgage market and these flaws get magnified, we might see regulators step in. Recently, Jack and Hallie took us to see some of the homes that the investors at the heart of the story bought up and then abandoned.

27:16Hallie Miller:We are on our way to Edding Street.

27:20Jack Bologna:The 2400 block of Edding Street is part of a historically black neighborhood in Baltimore. A couple years ago, Eliezer Gold's LLC bought 20 red brick row houses here, all on one side of the street. Last year, they went into foreclosure.

27:34Hallie Miller:Oh yeah, this is us. This is us, yeah. This is it? Yeah.

27:38Jack Bologna:As we turn onto the block, Jack spots something.

27:41Hallie Miller:Oh, one of them's burned. Whoa.

27:45Jack Bologna:Yeah, that's new. We get out and walk over to this burnt-out row house, stepping over broken glass and debris. The front door of this house is hanging open, the inside completely charred. It smells terrible, yeah.

27:58Hallie Miller:It's awful. Really awful.

28:01Jack Bologna:The homes next to it are all boarded up. When Jack and Hallie visited last year, this side of the street was in much better shape. There were even some tenants living here. But after the landlord stopped paying the mortgage and the homes went up for auction, nobody wanted to buy them. So they just sat here, effectively abandoned. Across the street, there are a few neighbors sitting on their stoops. They tell us, yeah, this fire just happened last week. The other day, it started around 3, 3.30. Yeah, I was in my window watching it. Lisa Revlon and Jean Henry have been living on this block for about 15 years.

28:35Jack Bologna:Lisa says in the beginning, this was a nice block. It was full of families and children. And it's still kind of that way on their side of the street. But on the other side, it's a different store, especially after the new owners came in.

28:48Hallie Miller:Would you say this side of the street has gotten worse in the last year? Yes, yes. You can look at it, yeah. Yeah.

28:57Jack Bologna:Yeah, it's gotten worse. They don't take care of the outside. You know, look, look, look. Overgrown. Lisa and Jean told us they're used to landlords coming and going. But the new landlords on the other side of the block, they never really seem to care. How does it make you feel that all these people not from Baltimore, all these investors or whatever in New York are just buying and trading? Yeah, I know. Like over your head. Like a Monopoly game. We play Monopoly.

29:29Hallie Miller:This is a good investment, but again, they live in New York. They don't care. They don't even live here.

29:35Jack Bologna:That's the dilemma in Baltimore. There are a lot of homes that need investment, that need people to come in and fix them up, make them livable. But after what happened to these 700 homes, some private lenders have stopped lending in Baltimore altogether. Now it's gotten harder in Baltimore to get a DSCR loan, which means all those crumbling row homes are still sitting there, waiting to be fixed up.

30:06Jack Bologna:Thank you, as always, to our NPR Plus supporters. Things are a little chaotic right now, and your regular support helps us be more ambitious, more focused on the work. You make the show better. And if you want to sign up to show your support, plus.npr.org. That's plus.npr.org. Thanks so much. By the way, Lisa Revlon, halfway through our conversation with her, Jack and Hallie realized she's the Lisa Revlon, as in the house of Revlon. She is a legend of the ballroom scene.

30:39Hallie Miller:Lisa Revlon? You're really underselling. My life, my life, yeah, because my life is more than just Barbara. You know what I'm saying?

30:49Jack Bologna:And by pure coincidence, Lisa was actually profiled last year by the banner, by another one of their reporters, Elisa Ju, who happens to be married to Jack. That's my wife. Oh my God, that's your, oh my God, I love her. She was having me. Oh, my God. Give me a hug. We're going to link to all the stories we mentioned in our show notes. This episode was produced by Sam Yellow Horse Kessler and edited by Jess Jang. It was fact-checked by Sierra Juarez and engineered by Travis Hagen and Sina Lafredo. Alex Goldmark is our executive producer. I'm Jeff Guo. This is NPR. Thanks for listening.

31:31Hallie Miller:This week on Consider This, the researcher who just resigned from Anthropic, why he believes AI is a threat to humanity. Very soon, these things are going to be so capable that if they decide to go rogue, it's not going to be good. Plus, his view of what guardrails could look like. This week on Consider This from NPR. On the next through line from NPR. Let's listen to Josh Reddick's new walk-up song. Whether you love it or you hate it, walk-up music has become a huge part of Major League Baseball. The need to secure the attention of the fans is relentless. I thought, am I hearing things? I mean, I realize everybody's singing along.

32:12Hallie Miller:Listen to NPR's through line in the NPR app or wherever you get your podcasts.