BOSTON — A Florida-based financial company took advantage of hundreds of struggling Massachusetts homeowners using deceptive and unfair sales tactics, according to a lawsuit filed Tuesday by the Mass. Attorney General’s Office Consumer Protection Division.
The lawsuit accuses MV Realty of deceiving more than 500 Massachusetts homeowners into entering “abusive contracts” for several hundred dollars upfront in exchange for a 40-year exclusive power of sale mortgage on their property.
“MV Realty’s business model and contract terms are unconscionable, targeting elderly and financially vulnerable homeowners who are short on cash, only to leave them with agreements they don’t understand and can’t get out of,” Governor-Elect Maura Healey said in a statement. “We are suing to get homeowners out of these contracts, protect our residents from this scheme, and stop this predatory company from doing any more business here in Massachusetts.”
Healey’s office is seeking restitution for consumers, rescission of the contracts, release of the mortgages, and civil penalties. Attorneys general in Pennsylvania and Florida have filed similar lawsuits against the company.
25 Investigates first reported on MV Realty’s business practices in November. The company markets a product called a “Homeowner Benefit Agreement” that, according to investigators, offers a small cash payment averaging $1,150 in exchange for a 40-year exclusive right for MV Realty to act as the listing brokerage when the homeowner decides to sell. Investigators said under the terms of the contract, the company can collect payments of at least 10 times the amount advanced “with virtually any title transfer or other service provided to the homeowner—not just when the home is sold.”
The complaint also alleges MV Realty uses “unfair and deceptive marketing and sales tactics to hide the true terms of the contract, which, effectively amounts to a loan, and uses illegal methods for securing its rights under the contracts, including mortgaging homeowners’ properties in violation of Massachusetts laws.”
MV Realty said in a statement the company is “proud” of the client relationships it has developed with more than 550 Massachusetts households.
“New business models that bring innovations to any longtime industry, like the real estate establishment, can sometimes draw questions,” MV Realty said in a statement. “That’s why we’ve been engaged in a transparent dialogue with the Attorney General’s office for the last several months and why it’s disappointing that they took this action. We are confident that after a full airing of the facts, the conclusion will be that MV Realty’s business transactions are legal and ethical and that our team has operated in full compliance with Commonwealth law. As this process moves forward, we remain fully committed to working with Massachusetts policymakers, including the Attorney General, to regulate these transactions.”
KIRO, Boston 25′s sister station in Seattle, spoke with a former-MV Realty telemarketer who said she was deeply troubled by what the company was doing.
“I started to have concerns pretty soon after I was hired,” said the woman, who did not want to be identified. “They were basically locking homeowners into a 40-year contract for an exclusive listing agreement. If homeowners decided they were going to go with another realtor or if they wanted out of the contract, they were going to end up having to pay three percent of the value of their home to MV Reality.”
The former employee said many of the homeowners she contacted were elderly, people who had recently inquired about refinancing or obtaining a home loan. The company uses spoofing software to disguise the area code of its calls, a point MV Realty doesn’t dispute.
“I thought it was wrong because we were [trying] to bait people. We were to be aggressive in our approach. And it was all about getting them transferred to an agent so that the agent could get them to say yes,” she said. “I believe that [homeowners] just thought that this is free money…they don’t read the fine print and realize that this is a 40-year contract.”
The worker said she was eventually fired from MV Realty after a dispute overtime off.
“I felt like I was taking advantage of people. It’s horrible. I didn’t want to make calls anymore. I didn’t want to push these people into something that I knew was just wrong,” she said. “It’s legal, but it’s not ethical.”
This is a developing story. Check back for updates as more information becomes available.
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