LAS VEGAS — Eric Abramovich took his seat on a panel at the annual conference for the American Association of Private Lenders and stared ahead as the moderator described a situation that was terrifying everyone in the industry.

A portfolio of more than 700 homes in an unnamed city is careening toward foreclosure, potentially wiping out more than $100 million of lenders’ money. Those purchases had largely been fueled by a trendy financial product known as a debt service coverage ratio, or DSCR, loan.

The moderator never mentioned Baltimore — or the role that Abramovich’s firm, Roc Capital, played in creating a foreclosure crisis roiling the city. Instead, he wanted to know: Could this be happening elsewhere?

In recent years, Wall Street has been underwriting billions of dollars in loans to investors, flippers and landlords buying up rental homes in cities across the country. So when the Baltimore portfolio of New York investor Ben Eidlisz and his associates imploded this year, almost everybody in this niche field snapped to attention. Some froze all their lending in Baltimore and blacklisted the investors and appraisers believed to be at fault.

The Banner reviewed thousands of public records to document the foreclosure crisis brewing in Baltimore and found that the portfolio contained loans made by two dozen different lenders. Roc Capital originated more loans than any other.

Executives at Roc Capital have stayed quiet about their role in the Baltimore crisis, ignoring previous questions from The Banner for a story detailing the Eidlisz-linked properties portfolio.

Then last month, Abramovich, the firm’s cofounder and the COO of its parent company, spoke at a conference at Caesars Palace on the Las Vegas Strip.

With nearly 1,000 attendees, it was billed as the largest ever gathering for private lending, a rapidly growing industry that shows no sign of slowing. Financial professionals spent two days socializing, making deals and attending educational panels.

Founded in 2009, Roc Capital helped rebrand and modernize private lending, once known as “hard money.” In a 2023 podcast interview, Abramovich said Roc Capital grew from a handful of traders “clicking our mouses” into a company with hundreds of employees who are reshaping the American housing market.

“The products that we’re creating are bit by bit addressing a really staggering housing crisis in the country,” he said at the time.

Roc Capital and its sister companies have lent nearly $20 billion to residential investors so far, Abramovich said in Las Vegas, making it one of the country’s top private lenders. But his panel — titled “Valuations & Inspections: Factual, Fluffed, or Faked?” — attracted a relatively small crowd.

Abramovich said he knew why.

“People want to talk about how to make money,” he said. “Not how to slow down their production and get values right.”

The more Abramovich spoke, the more he sounded like a doctor scolding a patient to take their medicine.

“The whole industry is in need for reform,” he told conference attendees. “There are gaping holes in the way that business is being done today.”

Abramovich’s diagnosis — that the private lending industry grew too rapidly and needs more safeguards — was a stark change in tone from other attendees. Most seemed upbeat about Wall Street’s appetite for their loans. But the specter of what’s happening in Baltimore loomed over the conference.

One lender, William Tessar of California’s CV3 Financial Services, told a panel that he put on a poker face during a business meeting this year when someone mentioned a wave of foreclosures in Baltimore. As soon as the meeting ended, he rushed to call his office.

“Are we in trouble?” he recalled asking.

CV3 was one of the lucky ones. Roc Capital was not.

Over the past three years, businesses connected to Benjamin Eidlisz purchased more than 700 houses in Baltimore.

Through a subsidiary called Loan Funder LLC, Roc Capital financed at least $35 million of these deals, according to a Banner review of property records.

That money was used to purchase and refinance at least 224 homes in Baltimore. Today, 70% of those homes are in foreclosure, records show.

Without going into the details of what’s happening in Baltimore, Abramovich said in Las Vegas that the integrity of the entire industry rests on a single, boots-on-the-ground person: the appraiser.

The appraiser is the person who goes to a property, takes measurements, looks at nearby home sales and determines the value of a house. That valuation is the bedrock of the lending process, Abramovich said, but “valuation problems” are rampant and “could be forming a bubble.”

Another industry leader, Toorak Capital Partners CEO John Beacham, echoed those concerns at an earlier panel. Beacham called the valuation process “broken fundamentally.”

Investors are using the same appraisers over and over again and developing cozy relationships, he said, despite guardrails meant to prevent that.

“It lends itself to fraud,” Beacham said. “It lends itself to bribes and sort of other incentives.”

In Baltimore, buyers connected to Eidlisz repeatedly had their homes appraised by the same two people, Jason Taylor and Christopher Actie. In a sampling of 88 confidential loan applications reviewed by The Banner, Taylor or Actie appraised every one of the houses. Neither has responded to multiple requests for comment.

Neither Eidlisz nor anyone associated with him has been charged with any crimes. Baltimore Mayor Brandon Scott announced recently that city officials opened an investigation into what they alleged is a “mortgage fraud scheme.”

The private lending industry, at the Las Vegas conference and beyond, has been using the F-word — fraud — more and more.

The Association of American Private Lenders’ most recent edition of its trade magazine included a feature story called “Inside the East Coast Fraud Scheme.”

Without naming any of the players, the authors detailed what they saw as the scheme: One investor takes out a loan and buys a home at a reasonable price. The property is then transferred to a related investor. A new appraisal shows a much higher value, and that investor takes out a much bigger loan. They use the second loan to pay off the original loan and split the proceeds.

Meanwhile, the house goes into foreclosure.

At the end of Abramovich’s panel, there was a Q&A session. A Banner reporter present asked: “What do you guys think happened in Baltimore?”

The room went quiet.

“Is that question for me?” Abramovich said, and the audience burst out laughing.

“There are multiple factors that can make loans go bad,” Abramovich said. “I think some of the sensationalist stories that are out there, they’re not quite on target with the real issue.”

The real issue, he argued, is the appraisal industry.

Correction: An earlier version of this article misspelled Caesars Palace.