PHILADELPHIA (WPVI) — The Pennsylvania attorney general has sued a real estate company, accusing the firm of misleading homeowners.
Attorney General Josh Shapiro on Wednesday announced the lawsuit against MV Realty, which was the focus of an Action News Investigation.
In its suit, Shapiro calls the company’s Homeowner Benefit Agreement a scam that exploits Pennsylvanians.
The MV Realty Homeowner Benefit Agreement gives homeowners a few hundred dollars upfront and, in return, the homeowners give exclusive rights to the company for the opportunity to sell a property for up to 40 years.
MV gets a 3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} commission on the home’s value when it sells or transfers to a loved one or heir.
The actions of MV Realty were also the subject of a Philadelphia City Council investigative hearing.
“I said, ‘what am I signing for?’ And they said, ‘you’re signing papers in order to receive the check for $365,'” said homeowner Rodney Thomas, who testified at the hearing.
Action News Investigation: Real estate company accused of deceptive practices
Thomas, who like other people who have talked to our investigative team, said he had no idea a mortgage lien was placed on his property to secure MV realty’s listing rights.
Others also said they were unaware of the 40-year term despite both key issues stated in their signed Homeowner Benefit Agreements.
“I read that contract from beginning to end and I never saw nothing about a 40-year contract,” said homeowner Felicia Pierce.
The Action News investigation, which was played at council hearings, found MV Realty placed more than 500 mortgage liens on Philadelphia properties, with most in minority neighborhoods.
“I think it is around 69{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the incidents that have happened in the city of Philadelphia and other places are clearly targeting communities of color,” said Council President Darrell Clarke.
Shapiro called the practices deceptive and asked the company to pay restitution, strike all mortgages and refrain from entering into the agreements.
Kerry Smith, an attorney for the non-profit Community Legal Services, is helping those impacted.
“Our clients are telling us they feel deceived,” she said.
MV Realty denies targeting minorities and says its practices are not deceptive and all terms are clearly spelled out to customers.
MV Realty Statement on Pennsylvania Attorney General Filing
“MV Realty has helped more than 30,000 satisfied clients nationwide through our Homeowner Benefit Agreement (HBA) by providing our clients up to $5,000 that can be used to pay their mortgage, utility bills or improve their financial standing. In return, we only ask to be their realtor if they sell their home during the term of our agreement
“We are proud that our team in Pennsylvania consists of local, licensed real estate agents. And when our realtors explain HBAs to clients, they always work in a transparent dialogue to ensure that each client understands the terms of the agreement.
“New and innovative business models, like the HBA, can transform established industries and can sometimes draw questions from critics or outright hostility from those whose existing business model is threatened. However, to suggest that MV Realty has engaged in unfair or deceptive practices is simply false.
“After a full airing of the facts, we are confident that the conclusion will be that MV Realty’s business transactions are in full compliance with Pennsylvania law. As this process moves forward, we remain fully committed to working with Pennsylvania policymakers, including the Attorney General, to discuss appropriate regulations and oversight for the new and emerging business.”
– MV Realty spokesperson
Regarding Philadelphia’s City Council Hearing:
“New business models that bring innovations to any longtime industry, like the real estate establishment, can sometimes draw questions from critics. We are happy to address them. That’s why it’s both surprising and disappointing that the City Council has never reached out for information about our company, to notify us that this hearing was taking place Wednesday or to ask us to participate.
“For anyone to suggest that MV Realty has engaged in unfair practices is simply false. We look forward to an airing of all the facts and, as always, MV Realty remains committed to full transparency in all of our business transactions. We also look forward to working with policymaker to ensure that our HBAs continue to benefit home buyers and home sellers in meaningful ways.”
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