MV Realty accused of making over $400 million in predatory loans

MV Realty, a Florida-based real estate firm, has been accused by the attorneys general of Florida, Massachusetts, and Pennsylvania of using deceptive practices to make predatory loans disguised as real estate service agreements to homeowners looking for fast cash. The lawsuits allege that MV Realty’s “Homeowner Benefit Program” offered cash-strapped homeowners money in the neighborhood of $1,000 in exchange for a 40-year agreement to use MV Realty as their real estate broker when they decide to sell. The contract is said to be enforceable even if the homeowner dies. The only way to get out of the deal is to pay MV Realty 6% of the home’s sales price or market value, as determined by MV Realty. This means that on a $1,000 payment, based on MV’s own estimates, they would have to pay MV roughly $10,000.

MV Realty has signed up 30,000 customers in at least 33 states, according to the lawsuit and other sources. Through the program, MV said it has paid about $40 million to homeowners. Based on documents Forbes has seen and guidance from experts, that implies MV would stand to make commissions of around $400 million at the current value of the homes encumbered by the agreements. MV Realty did not dispute that number.

It’s a strange arrangement, and at Floridians for Honest Lending, we believe the contract violates Florida’s Deceptive and Unfair Trade Practices Act. Whether it’s a scam will be determined by the legal system. Lawsuits filed in late 2022 by the attorneys general of Florida, Massachusetts, and Pennsylvania allege that MV Realty used deceptive practices to make what they say are predatory loans disguised as real estate service agreements. MV Realty vigorously disputes the allegations.

The Delray Beach, Florida-based MV Realty has colorful roots on Wall Street, where its unique business model was concocted. Its founder, Amanda Zachman — then known as Amanda Zuckerman — was a former star of TV’s Big Brother who became the reality show’s villain when she was captured on video making racist remarks. MV Realty is currently under fire not only from states that claim it is skirting usury laws to take advantage of desperate homeowners, but from lawmakers in Philadelphia who’ve taken notice that MV’s clients in the city are disproportionately Black.

MV Realty has also drawn the attention of three Democratic U.S. Senators from Ohio, Minnesota, and Oregon, who asked the Federal Trade Commission and the Consumer Financial Protection Bureau to determine whether federal laws are being violated.

“MV Realty, and companies like it, take tens of thousands of dollars from homeowners in exchange for a minimal upfront payment,” said the December 21 letter signed by Sherrod Brown of Ohio, Minnesota’s Tina Smith, and Ron Wyden of Oregon. “By advertising these agreements as a ‘loan alternative,’ companies are attempting to avoid the legal limitations on lending while in essence charging borrowers onerous rates. Sadly, exclusive listing companies are now a national problem, affecting consumers across state lines.”

It’s crucial that state legislators and the Florida Attorney General take action to protect homeowners from predatory lending practices. The allegations against MV Realty are a cause for concern.

We call on state legislators to investigate these allegations and take necessary action to protect homeowners from such predatory practices. We also urge the Florida Attorney General to thoroughly investigate MV Realty’s “Homeowner Benefit Program” and hold the company accountable if it is found to be in violation of any state laws. Consumers have the right to be informed about the terms and conditions of any agreements they enter into and should not be taken advantage of by predatory lending practices. State legislators and the Florida Attorney General have a duty to ensure that consumers are protected from such practices and we urge them to take action to investigate and address these allegations.