Real Estate Company Accused of Preying on Philadelphia Homeowners, Part 1
Homeowners didn't understand that they were entering into a 40-year contract that involved a mortgage
Homeowners all over Philadelphia are being inundated with ads for MV Realty’s Homeowner Benefit Program on social media, through robocalls, and some people even receive a knock on their door. The pitch is simple: Get a quick cash payment in exchange for a promise to use MV Realty as their real estate agent if they decide to sell their home in the future. Many homeowners say they were never informed that the contract is for 40 years and MV Realty can take out a mortgage on their home.
[00:00:01] Bob: This week on The Perfect Scam.
[00:00:03] None of them understood that they were entering into a 40-year contract, that they were signing a mortgage, that they would be on the hook for paying a fee for any transfer, even if he had nothing to do with the transactions.
[00:00:19] Everything about my house comes with their name attached to it as if they are my banker. And I, it, it was so scary I had to call my bank to make sure I still had the banker system that I had in that I owned that house; that's how scary it was.
[00:00:39] Bob: Welcome back to The Perfect Scam. I'm your host, Bob Sullivan. Timothy Calhoun worked in construction for his entire career, and he's managed to fix almost everything and anything during his life. Everything except, well, the day the city clerk called him to say, someone else had a mortgage on his home. And the same thing was happening all over Philadelphia, and as we'll learn today, all over the country, really. But we begin our story in the City of Brotherly Love.
[00:01:15] Bob: You're a retired builder, is that right?
[00:01:17] Timothy Calhoun: That's correct.
[00:01:19] Bob: Tell me some of the stuff that you worked on.
[00:01:21] Timothy Calhoun: Um, I actually just do complete renovations of houses. That was my whole career. My employer would give me keys to a project that needs a complete renovation, and I would go in and do the complete renovation, and then I'd give him the keys back.
[00:01:36] Bob: Do you do everything?
[00:01:38] Timothy Calhoun: Everything.
[00:01:39] Bob: That's, that's, that's amazing, you must be pretty handy.
[00:01:43] Timothy Calhoun: I'm pretty good with a hammer and screwdriver. (chuckles)
[00:01:48] Bob: What was your, is there a project or two that you're really proud of that you were, you know when you were done you looked at it and said, "I did that."
[00:01:55] Timothy Calhoun: The one that I'm sitting in right now, my house. I built this house.
[00:01:59] Bob: So I mean everybody's proud of their home, but you must be really proud of the home if, if you can look at every wall and every floor and say I, I built that.
[00:02:06] Timothy Calhoun: I did that. And it's going to be standing way after I'm gone.
[00:02:11] Bob: Timothy built the house with his own hands and paid off the house. But now, the retired builder isn't quite sure that he still owns the house. After all, when his mail comes, it often says, "MV Realty" on it.
[00:02:25] Timothy Calhoun: I get all kinds of mail here with their name and my name on it.
[00:02:30] Bob: Wow.
[00:02:31] Timothy Calhoun: It spooks me out.
[00:02:32] Bob: I can't imagine what that's like.
[00:02:34] Timothy Calhoun: It's spooky (chuckles). It's very spooky.
[00:02:38] Bob: Why does it say, "MV Realty" on Timothy's mail? Who or what is MV Realty? Well that's the heart of our story. It starts in the middle of last year.
[00:02:49] Bob: So when was the first indication that something was wrong?
[00:02:52] Timothy Calhoun: When City Hall called me. They called me on the phone and said, you need to get to City Hall. So, and they said it was about my mortgage. My house. And I, I'm like, I don't have a mortgage. This house is paid off. I reacted, I jumped up and I ran across the street and jumped on the bus and went to City Hall. And the lady when, when she told me I'm not the only one. She didn't get into how many other people have been notified just like me. But she said I'm not the only one.
[00:03:20] Bob: So she knew something was wrong.
[00:03:22] Timothy Calhoun: She knew something was wrong. They said, you know, "Somebody's attached to your mortgage. Go get a lawyer." So I knew it was a real problem.
[00:03:30] Bob: Timothy follows that advice right away.
[00:03:33] Timothy Calhoun: So I went to Community Legal Services with the information that City Hall provided. I got with Kerry Smith. She took matters into her hands, and she's been working really hard on trying to solve this matter for me.
[00:03:48] Bob: Kerry Smith is exactly the kind of person you want in your corner if your home is suddenly threatened.
[00:03:54] Kerry Smith: I'm an attorney with Community Legal Services of Philadelphia, CLS. And CLS provides free civil legal services to low-income Philadelphians on a range of matters. Everything from helping them deal with wage theft by employers, getting benefits that they deserve, preserving homeownership, and I work in our Homeownership and Consumer Rights unit where we focus on saving homeowners who are facing mortgage foreclosure or tax foreclosure, facing debt collection lawsuits, uh, struggling with student loans.
[00:04:26] Bob: So, how long have you been there?
[00:04:28] Kerry Smith: I've been at CLS for 17 years. That whole time in our Homeownership and Consumer Rights unit.
[00:04:34] Bob: When Timothy shows up at her office last year, he isn't the only one with a strange story about someone putting a mortgage on their home. At first, she has no idea what's happening.
[00:04:47] Kerry Smith: Last year, several homeowners sought legal help from CLS because they believed that they had fallen victim to a deed theft scam. They thought someone was trying to steal the title to their home. And the reason why is they had received a notice from the Philadelphia Department of Records informing them that a document had been recorded against their property, and they feared that someone had created a fraudulent deed transferring the ownership of their home. So we investigated...
[00:05:18] Bob: And after talking with Timothy, one thing is clear; the name on the mortgage is the same as the name on his spooky mail, "MV Realty." And Timothy explains to Kerry the first time he heard that name, as he later explained to me.
[00:05:34] Timothy Calhoun: Well this has been going on two years now. I was just scrolling through on my phone, not doing anything, and I saw this ad that popped up, and it says, "Free money," it said something to that effect. "Free money, and you allow us to maybe sell for your house in the future. Call us." So I called them, and they said that they, they have this new program that they're working out, and, and it involves them giving homeowners a certain amount of cash depending on how much their property is worth and the only thing the homeowner would have to do is call them first if the homeowner decides to sell.
[00:06:19] Bob: It's a story Kerry has heard already.
[00:06:22] Kerry Smith: Essentially what homeowners had reported to us is that someone had either called them on the phone, maybe they saw a social medial advertisement, even come and knocked on their door peddling something called a Homeowner Benefit Program. They promised some money, a few hundred dollars in cash that they could use for home repairs or any other necessities, and in exchange the company representatives told homeowners that their only obligation was to use MV Realty as their real estate agent should they choose to sell their home in the future. And in the pitch, the big emphasis was on the fact that they were under no obligation to sell their home.
[00:07:05] Bob: The homeowners who respond positively to the pitch, well they get very, very fast response.
[00:07:12] Kerry Smith: And then if the homeowner agreed, MV Realty quickly sends a notary to the homeowner's home to sign paperwork to finalize the deal. And it's a super-fast process. It's not uncommon for the notary to be sent that day or the next day with a stack of paperwork to sign, and people are typically rushed through it, and clients have told us that maybe that they spent just like 1 or 2 minutes with the notary signing the documents, and that they didn't receive copies of the documents. The notary showed up at their home with only one set, had them sign them, they took them and left.
[00:07:50] Bob: And that's essentially what happened to Timothy.
[00:07:54] Bob: So when you hung up the phone with them that first day, how long did it take before, what, did they mail you a check, or did someone show up at your house? How did that work?
[00:08:03] Timothy Calhoun: They sent the money to my account, but they sent somebody here with paperwork for me to sign.
[00:08:07] Bob: Hmm.
[00:08:09] Timothy Calhoun: And after I signed the paperwork, they sent the money to my account.
[00:08:15] Bob: And did that take, you know, a week, a, a month?
[00:08:18] Timothy Calhoun: No, it didn't take nowhere near none of that. It was probably 4 or 5 days at the most. He just came here, he pointed, sign this, sign this, sign this and that's it. He's going out the door. They don't say anything about a mortgage, because heard--, and if, if, if I would have heard the word mortgage, I would have hung up the phone on them.
[00:08:36] Bob: The homeowners, like Timothy, do receive the cash. In his case, $640. But then they get what Kerry alleges is a big surprise.
[00:08:47] Kerry Smith: And only later when they received a copy of the paperwork, or only later when they got a notice from the Philadelphia Department of Records about a document being recorded against their property, did they realize that they have actually entered into a much more complex contract; one that leaves them on the hook for paying MV Realty thousands of dollars in potential fees for any transfer of their property over the next 40 years regardless of whether the company had anything to do with the transaction. And any money that is due under that agreement is secured by a mortgage on their home.
[00:09:29] Bob: According to Kerry, the homeowners promised to let MV Realty sell their home under a contract that lasts 40 years. And if there's any transaction on the home, MV Realty gets paid 3%, and that payment is secured by what is essentially a lien placed on the property in the records office. She says MV Realty disputes the characterization of that as a lien, but it's Kerry's opinion that Timothy's $640 cost him about $6000 at some point in the future.
[00:10:01] Kerry Smith: This is not true in all states in which MV Realty is operating, but in, in Pennsylvania, they record an actual mortgage against the homeowner's property to guarantee any funds that are due under this homeowner benefit agreement. People reported just being shocked, totally blindsided that there was a mortgage included in the documents that they signed.
[00:10:24] Bob: Local journalists who got wind of what's happening would find out about these MV Realty mortgages then knock on doors around Philadelphia informing residents that there was a mortgage on their homes who often say they're surprised at this news. And that's how Timothy found himself at City Hall that day connecting with others in the same fix.
[00:10:46] Timothy Calhoun: There was another gentleman that was sitting next to me when we talked to City Hall. And what happened with him was he comes in and forgot about them, and he went to sell his property, and they put a lien against him and said, you can't sell it.
[00:11:02] Bob: Until he paid $6000.
[00:11:04] Timothy Calhoun: Until he pays $6000. And I said, I figured 6000 is their lucky number, they like that number. What they do is, any move that you make with your property, they're entitled to. So if I was to refinance, they would take 6000 off the top.
[00:11:22] Bob: Hmm.
[00:11:22] Timothy Calhoun: And if I was to sell it, they would take 6000 off the top.
[00:11:26] Bob: Timothy alleges he didn't understand any of this when he agreed to the deal. He says he thought the contract bound him to MV Realty for a much shorter time span.
[00:11:38] Bob: But let me, let me just go back over a few things. So you call them up and they basically tell you, um, "We're going to give you $640, and the only string attached is if you want to sell your home, you have to use our real estate agents." So that, that makes sense to you, right?
[00:11:55] Timothy Calhoun: It made sense to me.
[00:11:57] Bob: And they gave you the idea that that agreement lasted for six months, right?
[00:12:02] Timothy Calhoun: That's, that's correct. I wouldn't get in bed with them for 40 years. Who would do that? (chuckle) Knowingly, you know what I'm saying? Who would knowingly get in bed with these people for 40 years? Somebody you met over the internet. Now we're going to be in business for 40 years together? No.
[00:12:21] Bob: Felicia Pierce, another long-time homeowner in Philadelphia, found herself in the same kind of confusion with MV Realty.
[00:12:29] Felicia Pierce: I've lived in Philadelphia all my life, so I'm turning 59 in a couple weeks, so 59 years.
[00:12:35] Bob: Happy birthday.
[00:12:36] Felicia Pierce: Thank you.
[00:12:37] Bob: You were a retired collections office manager, is that right?
[00:12:40] Felicia Pierce: That's correct.
[00:12:42] Bob: Well tell, tell me what that job entails.
[00:12:46] Felicia Pierce: Well, I was in a multimillion deal--, dollar collection business, so whereas accounts for over a million dollars, I was used to collect those, those high debts, and did a very good job at it. (chuckles)
[00:12:59] Bob: And so, does, you're on the phone all day talking to people, negotiating?
[00:13:05] Felicia Pierce: Yeah, on the phone all day and you know, you had to have a special character to collect that kind of money, so I think I, I did good at that job.
[00:13:15] Bob: She is very proud of the home she purchased many, many years ago.
[00:13:19] Bob: When did you move into the house?
[00:13:21] Felicia Pierce: '98 or '99. I think it may be like 25 years.
[00:13:25] Bob: 25 years, wow, and did, do you remember why you picked the house in the first place?
[00:13:29] Felicia Pierce: Well, I picked the house because I, I was renting, and the rent was getting just so high I decided that to own would, would be better for me and my kids, and I could leave my kids something. But after the years are going by, the area changed, it wasn't as quiet as it was for me. Now my kids don't even want the house. So I need to just sell the house.
[00:13:49] Bob: And now she has a more pressing need to sell her home.
[00:13:54] Felicia Pierce: Well I, I've, I've had multiple car accidents, multiple workplace injuries, so I'm very injured, disabled. So it came for a time where my house is two levels, and my bathroom was upstairs and my bedroom was upstairs, and I think it was 2022, I could not get up the steps. So I had to sleep on my couch for a whole month. So I decided to sell my house because it was no longer, no, no longer meeting my needs with my disabilities, so that's when I decided to sell my house.
[00:14:27] Bob: Like a lot of folks, she needs to fix some things before she can sell. But, she doesn't have the cash. That's when she hears about MV Realty.
[00:14:36] Felicia Pierce: A friend of mine noted, told me, 'cause I had a, had a leak in my bathroom, and I'm on Social Security Disability. They don't give you that, there's no money in there for repairs for your house. And a, a help system, system to help you with your house repairs didn't have any funding, so I needed to get a hold to, I had money, but I didn't have enough to get the, the leak fixed. So he was telling me that he had got, he had did business with this company and they gave him like maybe $600 to hold, retain them as a, um, as their sales agent and he could sell his house whenever he wanted to, he didn't have to sell it immediately. And with me, I already had made the decision that I was going to sell the house because it wasn't good for my injuries at all. It was going up and down the steps was hurting me so bad.
[00:15:26] Bob: So she reaches out to MV Realty, and they respond immediately. An agent there gets an agreement ready that day.
[00:15:34] Felicia Pierce: She sent the people out the next day. The next two or three days, the notary guy came, and we went over the contract, and I had her on the line, and I signed into the contract for the $465 I think it was. And she, she sent that to my bank account through Zelle; everything was quick. Quick. It was, it was very quick. So I got the money and then I fixed my um, I did fix my leak, and then it was probably, that was like April...
[00:16:06] Bob: But like Timothy, almost immediately she starts getting strange mail to the house.
[00:16:13] Felicia Pierce: And then on, on, on my paperwork with MV Realty, everything about my house come with their name attached it as if they are my bankers. But it, it was so scary, I called my bank to make sure. I still had the banker system that I had in that I owned that house. That's how scary it was.
[00:16:32] Bob: Felicia does at first use MV Realty when she tries to sell her house, but it doesn't go well. She doesn't like the agent and she doesn't agree with the agent's advice. She says the agent wants to drastically drop the sales price, so after half a year, she figures she'll switch agents. And that's when there's a big surprise, she claims.
[00:16:54] Felicia Pierce: Once the six months, and the other realtor started calling me and saying that they can market my house, that they thought they had pictures too. So they wanted to come out and take new pictures and um, try to resell my house. And that's when I felt like I should call my lawyer and make sure I was going the right route because I knew I had signed that contract. And that's when I found out about that 40-year contract when she told me, she says, "Felicia, you can't use another realtor. They have you locked in." Nowhere in that contract did I ever see 40-year contract. I would have never agreed to that for $465. I could have borrowed that, a loan or a credit card to do it. That didn't sound normal to me, so that's when I got triggered, and I started calling um, I called Community Legal Services.
[00:17:38] Bob: Felicia is also working with Kerry in an attempt to get out from under the contract with MV Realty so she can switch real estate agents. But when we talked, she was still bound by that 40-year term and unable to live in her own home because of her disability.
[00:17:55] Bob: Well, where are you staying right now?
[00:17:57] Felicia Pierce: I'm at my daughter's, fortunate enough my daughter bought a house in Dover, um, right before Thanksgiving, and it has facility for me to have bathroom downstairs, my room is downstairs, so I don't have to use steps. I was blessed to be able to come over here with her, but this is her house. I still want my own.
[00:18:13] Bob: Felicia and Timothy, as they work with Kerry at Legal Services, she hears from plenty of other people under contract with MV Realty in the same situation.
[00:18:24] Kerry Smith: At this point, I have spoken with probably three, three or four dozen homeowners, and none of them, none of them understood that they were entering into a 40-year contract, that they were signing a mortgage, that they would be on the hook for paying MV Realty a fee for any transfer, even if MV Realty had nothing to do with the transaction.
[00:18:47] Bob: MV Realty told us that all the terms of the contract are clearly spelled out, but there are still plenty of complaints that echo Felicia and Timothy. The people at City Hall's Department of Public Records have heard these complaints too. And when they dig into this a little more...
[00:19:04] Kerry Smith: They went and did some research, and then realized that there has been over 500 recorded mortgages against Philadelphia homeowners' properties.
[00:19:12] Bob: 500 MV Realty mortgages? Just in the city of Philadelphia? About this same time, homeowners in other parts of Pennsylvania start complaining to the Pennsylvania State Attorney General's office about surprise mortgages all over the state. Officials there say at least 1,000 mortgages have been recorded against properties all around Pennsylvania. And, it's not just Pennsylvania.
[00:19:41] Elizabeth Blosser: And it was just this last summer that this topic came up on our message or, or chat board where a lot of title companies were starting to see these agreements pop up when they were doing searches in the, the land records or even when they were closing a transaction.
[00:20:00] Bob: That's Elizabeth Blosser from the American Land Title Association. Her organization became very concerned very quickly about these agreements.
[00:20:09] Elizabeth Blosser: Our members at the American Land Title Association are title agents, real estate attorneys, and they're generally the first to notice things, see trends in real estate. And we have a message board for people to, to go on and post about what's, what's happening in the industry, share their thoughts and their ideas, and I believe to this day the most talked about topic on that message board has been these long-term real estate listing agreements. And so what we did is, is sort of, I handle a lot of special projects and initiatives for the trade association, and so this sort of got my radar up. I was like, 40-year listing agreements that are recorded in the land records, yeah this is obviously something very unusual.
[00:21:01] Bob: It might be called a mortgage in Philadelphia, but in dozens of places around the country they're known as something else.
[00:21:08] Elizabeth Blosser: So these types of agreements are recorded as different things in different states. So in some states they have been recorded as an actual mortgage. In other states, notices, memorandums, but at the end of the day, when you go and record one of these agreements in the land records, it's absolutely an attempt to create a lien against someone's property. So what we have happening is people being paid as little as $300 to sign real estate listing agreements that would last for as long as 40 years, and then that agreement is being recorded in the land records in an attempt to create a lien against the property.
[00:21:58] Bob: The American Land Title Association is so concerned that their lobbying arm starts reaching out to state legislatures around the country to see if there's some way to ban these kinds of agreements. But Pennsylvania Attorney General, Josh Shapiro, doesn't wait. In December, he announces he's suing MV Realty for allegedly misleading consumers. The lawsuit demands that the agreements be nullified. But MV Realty says what it's doing is perfectly legal. In a statement issued to AARP by a company spokesman, the firm claims to have 35,000 satisfied clients nationwide. Quoting from a statement issued to AARP, "MV Realty remains confident that the Homeowner Benefit Program fully complies with the law and benefits consumers who receive a cash incentive to select MV Realty as their listing agent. The HBA Program compensates homeowners with the future right to list the home if they choose to sell within the term of the agreement. The HBA Program is an innovative option that is first and foremost designed to benefit homeowners by ensuring they are compensated for the exclusive right to list their home. There are no liens put on a customer's property, and the HBA does not affect or cloud the title. Consistent with the law, MV files a memorandum that simply informs third parties of the existence of the agreement between the property owner and MV Realty." So what happens to Tim and Felicia's homes? To the other homeowners in contracts with MV Realty? What are state lawmakers around the country racing to do in response? And what is MV Realty doing in response? Just who is MV Realty anyway, and what is the company's connection to a reality TV star? Well that's all next week on The Perfect Scam.
[00:37:56] Bob: If you have been targeted by a scam or fraud, you are not alone. Call the AARP Fraud Watch Network Helpline at 877-908-3360. Their trained fraud specialists can provide you with free support and guidance on what to do next. Thank you to our team of scambusters; Associate Producer, Annalea Embree; Researcher, Sarah Binney; Executive Producer, Julie Getz; and our Audio Engineer and Sound Designer, Julio Gonzalez. Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts. For AARP's The Perfect Scam, I'm Bob Sullivan.
END OF TRANSCRIPT
The Perfect ScamSM is a project of the AARP Fraud Watch Network, which equips consumers like you with the knowledge to give you power over scams.
How to listen and subscribe to AARP's podcasts
Are you new to podcasts? Learn how to subscribe to AARP Podcasts on any device.