Fredericksburg-area residents concerned that troubled Metropolitan Grapevine won't pay off their mortgages as promised can ask for a refund.
Chief Executive Officer Andrew H. Williams offered to return the investors' money during a meeting at the Washington Plaza Hotel on Aug. 18. It was held mainly so the officials could respond to reports raising the possibility that the company, which says it can pay off investors' mortgages in five years, could be operating a pyramid scheme.
A video clip of a portion of the meeting is available at metrotvnetwork.com. In it, Williams introduces two other company officers and slams banks as greedy for spreading home loans over 30 years instead of five as they do for car loans.
He also touts the wonders of his company's ATMs, which he says generate the money used to pay off the mortgages.
A Fredericksburg resident who watched the video because she wasn't able to attend the meeting said it didn't answer questions she had about the company. The woman, who asked that her name not be used, said she requested a refund of $50,000 minus mortgage payments the company has made since this spring.
So far, she said, she has received neither the refund nor this month's mortgage.
Virginia's State Corporation Commission is investigating Metropolitan Grapevine, which has an office in Chancellor Executive Center on State Route 3, and its affiliate, POS Dream Homes.
Earlier this month, Maryland Attorney General Douglas F. Gansler ordered the companies and their officials to stop soliciting new investors in that state until a hearing can be held.
Metropolitan Grapevine and POS Dream Homes are both based in Laurel, Md. Officials of both companies issued a statement late Thursday saying Maryland's order is "unconstitutional," and that the attorney general "rendered an arbitrary and capricious decision as it relates to our companies."
The officials have filed a petition with the court to have the order lifted, according to the statement.
The Securities Division of Gansler's office alleges that POS Dream Homes operated an unregistered promissory-note investment program under the guise of a mortgage-payment plan. Maryland requires that mortgage-payment plans be registered with the division.
According to a copy of a Metropolitan Grapevine's PowerPoint presentation, people are asked to pay $5,500 to join the program, then advised to refinance their homes and use the equity to lend 15 percent of the total debt--often $50,000 or more--to POS Dream Homes.
On a new house, the homeowner would take out a mortgage big enough for the seller to provide a 15 percent "finder's fee" payment to POS Dream Homes, according to some familiar with the plan.
According to the contract homeowners must sign, they have to split the equity in their homes after five years whether or not POS Dream Homes is able to pay off the mortgage by that time. The contract also is invalid if the investor reveals the terms to anyone not involved with the program.
Maryland's stop order also alleged that the companies failed to give investors information about various enterprises that company officials claim generate the money used to make people's mortgage payments, even when it was requested.
These enterprises, called POS Cafes, offer ATMs with flat-screen TVs that would carry advertising, plus credit-card readers and other revenue-generating devices.
"There is a great risk of the loss of investors' money where there is no demonstrated source of investors except other investors," Gansler said. "In a climate of rapid change in home values, a program like this can increase risks to lenders and home owners."
According to Metropolitan Grapevine's news release, people decided to take part in its mortgage-payment plan voluntarily, "and they take issue with the assumption that they are unintelligent and uninformed."
Company officials added that they believe the real-estate professionals, lenders and title companies that have worked with their companies have been ethical and professional.
"We are a legitimate organization and take issue with any assertions to the contrary," the statement said.
Cathy Jett: 540/374-5407