PHILADELPHIA – The Philadelphia Consumer Financial Protection Task Force and other advocates raised concerns today during a City Council hearing regarding a company that is offering “homeowner benefit agreements” that jeopardize home equity and disproportionately impact Black and brown homeowners.
Council’s Committee on Housing, Neighborhood Development, and the Homeless held the hearing to examine the practices of MV Realty Pennsylvania LLC. Since 2020, over 500 properties have had mortgages recorded to the Florida-based company, according to online City records. The contracts typically last for 40 years and require the homeowner to use MV Realty as their real estate agent if the homeowner decides to sell the home at any time within those 40 years and to pay MV Realty a 3-6 percent commission. In exchange, homeowners receive a one-time payment of a few hundred dollars in most cases.
“One of the greatest threats to economic mobility for Philadelphians with low incomes is wealth extraction. Unfortunately, we have seen this time and time again where predatory actors attempt to transfer wealth from low-income individuals, particularly our Black and brown communities, to higher-wealth individuals,” said Mitchell Little, Executive Director of the Office of Community Empowerment and Opportunity and co-chair of the Task Force. “CEO cares deeply about keeping people away from wealth-stripping schemes like this, which is why we worked with Mayor Kenney to launch the Task Force in May 2022. Its purpose is to identify threats to consumers quickly, mobilize responses to prevent harm, and coordinate efforts across agencies.”
Community Legal Services (CLS) represents several homeowners who signed agreements with MV Realty. As part of the Task Force, CLS brought the issue to the attention of the larger group, which led to today’s hearing.
“MV Realty engages in unfair and deceptive practices to trick homeowners into signing away their most valuable asset in exchange for a few hundred dollars,” said Kerry Smith, an attorney with Community Legal Services’ Homeownership and Consumer Rights Unit. “CLS believes these agreements violate Pennsylvania law and will continue working with other consumer advocates to stop this predatory scheme.”
In addition to the 40-year term, the agreements allow MV Realty to take a mortgage on the home. The mortgage can make it difficult for homeowners to refinance, get a home equity line of credit, or sell their home. The contract also requires homeowners to pay MV Realty 3 percent of their home’s value – as determined by MV Realty – under certain conditions.
Reinvestment Fund mapped out the MV Realty mortgages in Philadelphia and Delaware County. Their analysis found that most were disproportionately made to people of color. In Philadelphia, an estimated 69 percent of the mortgages in the city were recorded on Black-owned homes.
“This follows a similar pattern that we observed in the period of predatory and subprime lending in Philadelphia; it persists with problematic reverse mortgages and a continued lack of access to good home mortgage credit in these neighborhoods,” said Ira Goldstein, President of Policy Solutions at Reinvestment Fund. “Reinvestment Fund is committed to ensuring that everyone has access to essential opportunities, including an affordable place to live, but these kinds of practices undermine that work.”
Today, the Pennsylvania Attorney General announced a lawsuit filed against the company and its owner, alleging they “misled Pennsylvania consumers regarding the terms of the company’s so-called Homeowner Benefit Program and obtained mortgages on consumers’ homes without their knowledge.” Attorney Generals in Florida and Massachusetts have also recently filed suit against MV Realty. Local homeowners who have been adversely affected are encouraged to file complaints with the Pennsylvania Attorney General by completing an online form or calling 1-800-441-2555.
“City Council called for this hearing today to look into serious allegations of homeowners in Philadelphia being taken advantage of by a real estate firm,” said Council President Darrell L. Clarke. “For many people, their home is the most valuable investment of their lifetimes, and Council will do everything in its power to protect that investment from unscrupulous tactics or companies. We look forward to working with the City and other legal advocates to establish a clear, legislative record about these tactics, and we’re hopeful that justice will be delivered for any impacted homeowners.”
For more information about MV Realty’s practices in Philadelphia, consumers can visit www.phila.gov/consumer-protection. With support from the Task Force and the Department of Planning and Development, CLS is also holding three information sessions. The first will be virtual on December 19, at 6:00 pm. The other two will be in person, with dates, times, and locations to be announced soon. Homeowners must register for the free sessions.
About the Philadelphia Consumer Financial Protection Task Force
Established by Executive Order in May 2022, the Task Force convenes organizations currently working to protect consumers from unfair, discriminatory, predatory, and fraudulent products, and leverages shared expertise to combat the consumer threats facing Philadelphia. The Task Force identifies issues that pose the most significant threat to Philadelphia consumers and proposes appropriate litigation, legislation, or consumer awareness campaigns to address those threats. More information is available at www.phila.gov/consumer-protection.