Grand Traverse official raises awareness for homeowners
Jan. 8—TRAVERSE CITY — A Florida real estate broker offering “novel” listing contracts in more than 30 states, including Michigan, is accused by three state attorneys general of a deceptive scheme in home equity.
MV Realty is a Delray Beach-based company that specializes in real estate. They offer the contracts, the Homeowner Benefit Program (or HBP), which pay homeowners up-front money, regardless of whether or not they plan on selling. The HBP also includes a 40-year listing agreement, which is then recorded as a lien against their property.
Peggy Haines, Grand Traverse County Register of Deeds, stated that she was disturbed by the strange-seeming agreements when she first filed agreement memorandums with her office last January.
Haines stated, “I don’t think people really understand the ramifications until they try and get a mortgage or refinance the property.” “I wonder if they really are worth the sacrifices they make up front.”
Haines stated that she is now sending a letter asking Grand Traverse County homeowners who have an HBP contract attached on their property to clarify the terms.
Haines stated that at least seven HBP memorandums were recorded with her office. She estimates more than 1,000 such agreements have already been recorded in Michigan.
According to a Pennsylvania complaint, 778 American homeowners were subject to an MV Realty HBP Contract in 2021. That number jumped exponentially and reached 32,000 by August 2022.
According to court records, MV Realty’s founder Amanda Zachman and MV Realty are currently facing civil lawsuits in Florida.
Zachman was a Big Brother houseguest in 2013. This reality television series, which airs on CBS, features strangers who become roommates and form alliances. Then, they vote to evict each other until one winner is selected.
The Florida lawsuit names Antony Mitchell, CEO of MV Realty, and David Manchester as co-defendants.
Mitchell was previously the CEO of Imperial Holdings. This finance company settled a class-action lawsuit after an investigation by U.S. Justice Department in 2012. Records show that no charges were ever filed.
MV Realty has maintained that the agreements they sign are not only new and innovative, but also legal.
“MV spends considerable time and resources to ensure it operates in a manner that is consistent with law,” the company stated in a previously submitted statement to the Record-Eagle.
A national investigation by the Better Business Bureau — which now rates the company an “F” after its former “A-” — plus details included in civil complaints filed by state attorneys general in Florida, Massachusetts and Pennsylvania — describe telemarketing violations, confusing contracts and subterfuge.
“Often, a notary arrives to the home with only one HBA paper,” states a Florida AG Ashley Moody complaint.
The court filing states that consumers claim they were not allowed to see the HBA during their home visits. “Further notaries who have notarized HBAs signed consumers say that they were told not to explain HBA to them before they sign.”
An alert posted to an online discussion forum for notaries, the Signing Agent Network’s Notary Café, warns members away from taking assignments from MV Realty, and accuses the company of targeting vulnerable people.
“Some of the places MV Realty’s notaries have previously met Pennsylvania consumers include a parking lot at Dunkin’ Donuts, a Booth at Eat ‘N park restaurant and a spot on the street near Center City Philadelphia,” court documents filed Dec. 13, 2013 by Pennsylvania AG Josh Shapiro.
The court filings state that multiple consumers signed the Homeowner Benefit Agreement pages of MV while leaning against the hood MV Realty notary’s vehicle.
According to records, MV Realty in Pennsylvania is also accused of running a business without registering “MV Realty of Pennsylvania LLC” business entity.
Corporate filings indicate that the company is in Michigan.
Camille Campbell is a Coldwell Banker licensed real estate agent in Traverse City. She previously raised concerns about HBP with clients, colleagues and the Record-Eagle. She said that the contracts created a troubling buzz within the industry.
Campbell was contacted by a North Carolina friend to report that MV Realty booths were present at the farmers’ markets.
Their Homeowner Benefit Program is as follows: For an upfront payment of $300 to $5,000 (MV Realty advertises it as), homeowners sign a contract stating that MV Realty will have the sole right to list their home for a commission of 6 percent if they decide to sell.
A memorandum, referencing the HBP, is sent to Register of Deeds of each county in which the home is located. It is recorded as a lien for the property for 40 years.
MV Realty will charge a termination fee of 3 percent of the property’s fair market value if the homeowner defaults within the 40-year period. This could be due to the homeowner listing the home with another Realtor, losing the home in foreclosure, or listing it for sale by the owner.
Court records show some homeowners who signed HBP contracts and later listed their property for sale by owner, received correspondence from MV Realty stating they were liable for the termination fee, “the consideration” they’d received — meaning the up-front payment — as well as interest, costs and MV Realty’s attorney fees.
Also, homeowners waive their rights in a class-action lawsuit, consent to MV Realty using photographs of them for company marketing materials, and agree that MV Realty may delegate some or all its obligations to others. A copy of the agreement was also provided to Record-Eagle.
Chris Lambert, coowner of Northern Title Agency said that the standard listing agreement in Michigan from a licensed Realtor usually lasts for three, six, or 12 months.
Lambert explained that “it is creating clouds upon title”, which refers to any encumbrance that makes it difficult for the owner of the real property to claim ownership.
Lambert explained that all property owners must sign a mortgage when lenders lend money to customers. A “cloudy possibility,” that someone else may have an interest in the property is why the additional person must sign the mortgage. Otherwise, the bank won’t lend the money.
Lambert stated that if the defect is severe enough, the title to the property will be considered unmarketable.
Local properties are not being reported as unmarketable. However, Haines says that property owners with HBP attached to them can make it difficult or impossible for people to refinance, home equity loans, or property inheritance.
Michigan’s Attorney General’s Office spokesperson said that no complaints have been filed against the company regarding its activities in Michigan.
Federal watchdogs expressed concern about HBP type contracts in December after receiving a Dec. 21 Letter signed by U.S. Senates from Ohio, Oregon, and Minnesota.
Tina Smith, D.Minnesota, Sherrod brown, D.Ohio, and Ron Wyden D.Oregon signed the letter.
The senators asked the Federal Trade Commission as well as the Consumer Financial Protection Bureau for a review to determine if the contracts violate consumer protection laws.
Grand Traverse County homeowners were not available for comment.
However, one homeowner stated that they had signed the agreement while they were in a difficult financial situation and that they didn’t want their participation (or the $1,200) to be publicized.
MV Realty stated in a statement, that it only reaches out directly to those who have submitted inquiries to MV through third-party websites. These inquiries are directed to MV by consumers who consent to receive the information.
However, the company is accused of violating state telecomms statutes by calling consumers who had registered their phone numbers with a national Do-Not-Call Registry. The pool numbers were used to simulate local calls. Consumers then received pre-recorded voicemail messages.
A Texas homeowner registered her number on the national registry and was awarded a $2,000 default judgment by MV Realty for this type of activity. Records show.
Mabel Arredondo, El Paso County, said that she was not interested in an HBP but suggested to the caller that she may consider the offer “for the sole purpose” of identifying the caller and/or the company responsible.
Arredondo was emailed by MV Realty’s agent an HBA contract. Court records indicate that Arredondo asked for a halt to the calls. The company refused. Arredondo filed suit against MV Realty and won by default.
According to records, no such suits were filed locally.
Kim Bush from Michigan’s AG’s Office said that residents can file a complaint online at: Michigan AttorneyGeneral Consumer Complaint Formula (state.mi.us).