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News March 24, 2023

Scheme Targets Homeowners

Topic Housing
Geography Multi State

View more stories from our 2022 Annual Report

A Florida-based firm’s wealth-stripping scheme is the latest threat to some of the country’s most vulnerable homeowners

Homeownership has long been valued as a gateway to intergenerational wealth. Owning a home is a valuable resource for all families, but for communities of color, purchasing a home has historically been frustrated by discriminatory practices.

Discrepancies in homeownership rates by race in the United States underscore further the barriers communities of color face—for example, according to U.S. Census Bureau, in 2022 fewer than half of Black and Latino families own a home compared to nearly 75% of white families.

For decades, many of these practices operated legally—for example, 1930s-era redlining practiced by financial institutions and the federal government—resulting in subsequent systematic disinvestment. While many of those practices were outlawed with the passage of the federal Fair Housing Act of 1968, discriminatory housing practices and inequitable access along racial and ethnic lines persist.

As a Community Development Financial Institution (CDFI), Reinvestment Fund is more than a non-traditional lender. Reinvestment Fund works with government, philanthropic and corporate clients to shift how entire sectors work in order to dismantle systems that perpetuate social and economic inequality. Housing research and quantitative and qualitative analyses on topics ranging from housing markets to evictions to foreclosures is one of the organization’s focus areas. Most recently, Reinvestment Fund is using its findings of predatory practices conducted by a Florida-based real estate company—MV Realty—to help local and federal authorities hold the firm accountable.

MV Realty is connected to the latest threat to wealth accumulation through homeownership across the country. Attorneys General in Florida, Massachusetts, North Carolina, Ohio and Pennsylvania are suing the Florida-based firm, generally alleging, among other things, that MV Realty engages in a damaging set of unfair and deceptive practices. In addition, several reports and articles have alleged that MV Realty preys on unsuspecting homeowners using what they call “Homeowner Benefit Agreements.” The problematic terms of the agreement have come as a shock for homeowners who allege they were misled by the firm’s exploitative marketing tactics.

On the surface, the agreement allows the cash-strapped homeowner to access a one-time cash payment—a few hundred dollars in most cases—in exchange for signing on MV Realty as their exclusive real estate agent if/when they decide to sell in the next 40 years. However, despite their name and the firm’s insistence that the agreement is “not a mortgage,” these agreements lock homeowners into a four-decade obligation. They can trigger a penalty worth 3% of the home’s value—as determined by MV Realty—in exchange for the initial upfront cash payment. Some of these triggers include if the homeowner chooses a different realtor, loses the property due to foreclosure, dies, and the heirs do not sign a contract with MV Realty within ten days of the homeowner’s death, or the homeowner tries to cancel the contract. The homeowner is then typically committed to ten times what they received in their cash payment.

Homeowners and law enforcement entities allege that MV Realty effectively concealed from homeowners that they placed a mortgage and lien on their homes. The mortgage can make it difficult for homeowners to refinance, get a home equity line of credit, or sell their home. Even for homeowners who have no intention of selling their homes—a 40-year term agreement makes it likely that homeowners or their uninformed families will be hearing from MV Realty again.

At the end of 2022, Reinvestment Fund analyzed MV Realty’s activity in several counties across Pennsylvania. The data suggested that the firm’s deceptive homeownership agreements disproportionately impact Black and brown Philadelphians and communities of color. The research, spearheaded by Reinvestment Fund’s Policy Solutions team, finds that an estimated 69% of MV Realty mortgages recorded in Philadelphia were on Black-owned homes despite Black Philadelphians making up only 37% of all homeowners in Philadelphia.

Specifically, these agreements have disproportionately impacted Black homeowners in Southwest, West, and Northwest Philadelphia—the same neighborhoods that have historically been impacted by other unfair housing practices (e.g., abusive subprime mortgages, reverse mortgages that went to foreclosure).  In addition, data examined by Reinvestment Fund for other counties in Pennsylvania affected by MV Realty’s agreements reveal similar racial disproportionality.

MV Realty’s scheme is not limited to Philadelphia, and it is not new. Homeowners in 33 states, including in Georgia’s metro Atlanta, have raised alarm bells to convene state and local entities to address the deceptive practices. According to Reinvestment Fund’s President of Policy Solutions, Ira Goldstein, “Combatting the activity of MV Realty and others who would prey upon homeowners requires a three-pronged approach: constructive investment, law enforcement, and raising public awareness.”

Apart from conducting research and sharing the findings with the Commonwealth, Reinvestment Fund is joining several partners to advocate for homeowners’ rights at the policy level and hold MV Realty accountable.

Malcolm X is reputed to have said, “Racism is like a Cadillac. They bring out a new model every year.” Whether it was redlining of the 1930s, blockbusting of the 1970s, predatory and abusive lending of the 1990s and 2000s, or problematic reverse mortgages that went to foreclosure—communities of color continue to be disproportionately victimized by discriminatory lending and real estate practices. Today, the Florida-based firm’s wealth-stripping scheme is the latest threat to some of the country’s most vulnerable homeowners.

If you are a homeowner and signed an agreement with MV Realty, you can contact the consumer protection divisions of your state’s attorneys general for assistance. If you think your rights have been violated, contact the U.S. Department of Housing and Urban Development (HUD) to file a fair housing complaint.

Learn more about our fair housing work.

Originally published in the Saporta Report, March 24, 2023

For more information, contact:

Ira Goldstein
Senior Advisor, Policy Solutions

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