Three states allege that MV Realty, a Florida real estate firm, used deceptive practices to make what they say are predatory loans disguised as real estate service agreements to homeowners looking for fast cash.
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MV Realty has an offer for cash-strapped homeowners: Forget payday loans, which frequently start borrowers down the road to financial ruin, and instead take cash in the neighborhood of $1,000 from MV and never have to pay it back.
The catch: For 40 years, the homeowners are required to use MV Realty as their real estate broker when they decide to sell.
The contract says it’s enforceable even if the homeowner dies. There’s one escape hatch. If they want to get out of the deal, the owner or their family would have to cough up cash equal to 6% of the home’s sales price or market value — as determined by MV. That means that on a $1,000 payment, based on MV’s own estimates, they would have to pay MV roughly $10,000.
MV calls it its Homeowner Benefit Program. The company has signed up 30,000 customers in at least 33 states, according to the lawsuit and other sources.
Through the program, MV told Forbes 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 didn’t dispute that number.
It’s a strange arrangement, but whether it’s a scam will be determined by…
