A brokerage allegedly put liens on hundreds of New Jersey homes without their owners’ knowledge as part of a “homeowner benefit program,” according to the state’s attorney general.
The Clark, New Jersey, office of MV Realty, a Florida-based brokerage firm, marketed the program as an easy way to get cash, New Jersey Attorney General Matt Platkin said in a lawsuit filed Tuesday. In exchange, MV Realty would get the right to serve as their brokerage if they sell the home in the future, the suit alleged.
Homeowners received $300 to $5,000 upfront and were promised that the program was not a loan and imposed no obligation to sell.
In reality, it operated as a high-interest mortgage loan that gave MV Realty a right to list the home for 40 years. MV’s contract also continues beyond the homeowner’s death and “levies an exorbitant early termination fee,” Platkin said.
To get out of the deal, homeowners must pay at least 3 percent of the home’s sales price (or 1,000 percent of the customer’s initial payout).
MV Realty previously denied that liens are initially placed on homes, according to an FAQ posted on a website run by the company. Rather, the site claimed, a memorandum or mortgage is filed on homes to serve as public notice of the agreement.
“In the event the customer breaches the agreement MV Realty has a right to [place] a lien against the home,” the website reads.
But the filed “memorandums of benefit” are indeed liens against the consumer’s property, according to the complaint.
A representative from MV Realty did not return a request for comment, but a trade group representing brokerages that buy future listing rights issued a statement implying that its members give homeowners a better deal than traditional brokerages.
“It’s shameful that an alternative to traditional real estate relationships that directly benefits New Jersey homeowners is somehow being presented as abusive or deceptive,” said Jim Terlizzi, director of the Future Listing Purchasers Association. “Homeowners have always given away the right to sell their home without any form of financial compensation to them. Future listing agreements allow homeowners to be fairly compensated for the right to list their home by a licensed realtor if they ever choose to sell their home.”
MV Realty’s CEO, Amanda Zachman, was the star of MTV’s Big Brother season 15. She was formerly known as Amanda Zuckerman.
The firm, which is not registered as a telemarketer in New Jersey, allegedly marketed the agreement by making unsolicited calls to homeowners in need of cash, according to the complaint. Telemarketers also never revealed all the terms of the program, including the 40-year contract length and hefty early termination fee.
The fee also applies if the home is foreclosed upon, if the title is transferred, if heirs try to sell a home or if the consumer tries to get out of the deal, Platkin said.
The attorney general’s complaint alleges that MV Realty’s practices violate the Consumer Fraud Act, as well as New Jersey general advertising and telemarketing regulations.
Over 1,250 consumers in New Jersey fell for the alleged scheme. MV Realty also has offices in 32 other states, according to its website.
The New Jersey lawsuit demands MV Realty void all liens against homeowners and pay restitution, repay profits earned through the scheme and pay civil penalties.
The New Jersey Real Estate Commission will also be taking action against the real estate licenses of the company and affiliated individuals, Platkin said.
Its filing Tuesday demands company executives and at least one New Jersey broker explain why their real estate licenses should not be suspended or revoked and fines imposed.
MV Realty has also agreed to stop soliciting New Jersey customers for the program until the case is resolved, Platkin said.
“This company misled consumers about the true nature of its product,” Platkin said. “MV Realty sold its product as free money when it was really a loan secured by what is often consumers’ most valuable asset, their home.”
Pennsylvania, North Carolina and Ohio state agencies all sued the company last year, making similar allegations.
This story has been updated with a statement from the Future Listing Purchasers Association.
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