|Berkshire Middle Registry Warns Residents of Mortgage Scam
|By Brittany Polito, iBerkshires Staff
02:23PM / Tuesday, February 28, 2023
PITTSFIELD, Mass. — The Registry of Deeds urges residents to use caution when signing property-related documents.
MV Realty PBC LLC — also known as MV of Massachusetts LLC — is being sued by the attorney general for allegedly using deceptive tactics that target financially struggling homeowners across the state. The Middle Berkshire Registry of Deeds shut down attempts to file these documents after only one was recorded.
"We do a really good job keeping records and the state and the Attorney General's Office and all of our legislators do everything they can to protect homeowners, especially elderly and vulnerable homeowners," Register Patricia Harris said.
"So try to do your best to not sign on the dotted line unless you are in the presence of an attorney who is licensed to practice in Massachusetts."
Owners were reportedly offered cash reimbursements between $500 and $5,000 from MV Realty to sign a real estate brokerage agreement that could be enforced by a mortgage with a 40-year maturity date. It is referred to as a homeowner benefit agreement.
In Western Mass registries, which includes Berkshire, Franklin, Hampshire, and Hampden counties, there were 89 mortgages recorded from the company. There was one recorded at the Berkshire Middle Registry in September 2021 during the height of the real estate boom but around 20 were averted.
Harris explained that you would typically see a maturity date that clearly states when the mortgage is due and the amount. In the recorded document, there was neither and it simply referred to a brokerage agreement that was in a way tied to the mortgage.
To her, it became apparent that the company was offering to sell people's homes at some point in time and provided money in return for a mortgage on the property.
The person who recorded with MV Realty didn't seem to understand that he had signed a mortgage.
"I just thought that was ridiculous and dangerous, really," Harris said, adding that there were also conditions that gave the company statutory power of sale or foreclosure on the property if it decided there was a breach.
This poses a hassle for owners because they have to protect their rights and hire a lawyer, she said, and the people likely to take a cash offer are already financially struggling.
The registry then rejected every mortgage from this company and spoke to the Massachusetts Registers and Assistant Registers of Deeds Association about it. Registers across the state were also rejecting MV Realty mortgages.
"They're relying on deception, misrepresentation, targeting elderly," Harris said. "It is a very real threat and it could result in these people losing their homes and that is probably their most valuable asset."
In October, Harris sent an email to former Attorney General Maura Healey warning her of the situation.
The register has determined that homeowners are contacted by a representative of the company who then sends a notary public to meet with them to acknowledge their signatures on a mortgage before giving them the cash.
An MV Realty spokesperson said the agency's team of licensed real estate agents have "assisted over 35,000 satisfied homeowners across 33 states" through its homeowner benefit agreement.
"Under a traditional real estate transaction agreement, homeowners grant listing agents the rights to sell their home without compensation," the spokesperson said. "Our innovative HBA program compensates homeowners with an upfront, direct payment that they can save, spend, or invest in exchange for granting MV exclusive rights to list the home only if they choose to sell within the duration of the agreement for the price the homeowners determine. No homeowner is under any obligation to sell their home under the terms of the HBA and is not required to repay funds if they do not choose to list their home within the duration of the agreement."
In December, the AG filed a complaint in Suffolk Superior Court.
According to the AG, the terms buried in the homeowner benefit agreement include a clause that allows MV Realty to assign the right to be the homeowner's broker to anybody it wants to, without restriction; a clause ensuring a minimum payment to MV Realty, even if it overestimated the value of the home; a clause that requires tenfold repayment of the advance if the owner loses the home to foreclosure; and a clause that says that if MV Realty does act as a broker it will not owe homeowners the duty of loyalty or duty of confidentiality real estate agents generally owe their clients.
"MV Realty's business model and contract terms are unconscionable, targeting elderly and financially vulnerable homeowners who are short on cash, only to leave them with agreements they don't understand and can't get out of," Healey said in a press release.
"We are suing to get homeowners out of these contracts, protect our residents from this scheme, and stop this predatory company from doing any more business here in Massachusetts."
Healey's office contacted the Middle Berkshire register around this time to let her know that no more MV mortgages should coming through. This meant that there was a cease and desist of some sort.
"After I received that phone call from the Attorney General's Office, we hadn't received any more," Harris said.
"It did stop abruptly so I think that was awesome. Maybe my email just pushed it over the edge, maybe it did absolutely nothing, I don't know but I can tell you that within a couple of months of sending it, we were done with this problem."
If the suit rules that these are not legitimate mortgages, the Middle Berkshire property owner will likely be let of their contract with MV Realty.
MV Realty says it has paused any new agreements and is working on ensuring "greater transparency" for customers and training team members on adherence to company policy.
"We are taking the concerns of regulators and legislators seriously and are implementing immediate, concrete steps to address any potential shortcomings — real or perceived — of our innovative Homeowner Benefit Program," the company spokesperson said. "MV Realty is committed to working with policymakers and others in government on pragmatic regulations that ensure fair and ethical practices within the real estate industry and address any concerns regarding the HBA program."
The register emphasized the importance of having legal representation for signing legal documents. While the office can provide documents needed for property owners to answer questions, registry staff are not attorneys.
"With a legitimate credit company, lending institution, or credit union, you would be represented by an attorney, first of all," Harris said. "And the attorney would make sure that you were signing a legitimate document and not something that could get you into serious trouble."
She was very impressed with the AG office's response to the situation and is glad that her office was able to shield future residents from it.
Tips provided by the Registry of Deeds:
Never sign a document pertaining to your home unless in the presence of an attorney who represents your best interest.
Do not purchase Home Title Lock Insurance. Instead, sign up for the registry's free notification service that provides email alerts on all documents recorded at a registry under a person's name.
If you receive a solicitation in the mail for the purchase of a Property Profile (which typically arrives shortly after the purchase of a new home,) do not respond and do not pay the requested fee which is typically more than $100. After payment, you will receive a copy of your deed that the registry provides for less than $3 and other information that is easily found online for free through the assessor's office.
If you are offered cash for your signature, understand that this is risky business and the stakes are high for any amount of cash.
Call the Middle Berkshire Registry at 413-443-7438 or your local registry with any questions about property records and to inquire about any of the above-stated potential scams, or to report any potential scams.