Jan. 8—TRAVERSE CITY — A Florida real estate broker offering "novel" listing contracts in more than 30 states, including Michigan, is accused by three state attorneys general of a deceptive scheme in home equity.

MV Realty, a Delray Beach-based real estate company, offers the contracts, called the Homeowner Benefit Program, or HBP, which pay up-front money to homeowners, whether or not they plan to sell, in exchange for a signed 40-year listing agreement which is then recorded as a lien against the property.

Grand Traverse County Register of Deeds Peggy Haines said she was troubled by the curious-seeming contracts when agreement memorandums were first filed with her office last year.

"I don't think people understand the ramifications of this until they try to get a mortgage, refinance or sell the property," Haines said. "I still wonder if the up-front money is worth what they are giving up."

Haines said she now sends a letter to any Grand Traverse County homeowner with an HBP contract attached to their property, asking if they fully understood the terms before signing.

At least seven HBP memorandums have been recorded with her office, Haines said, estimating more than 1,000 such agreements have been recorded in Michigan.

A complaint filed in Pennsylvania shows 7,778 U.S. homeowners were under an MV Realty HBP contract in 2021; that number rose exponentially to 32,000 as of August 2022.

MV Realty and its founder, Amanda Zachman, a former reality television personality, face civil lawsuits in Florida, Massachusetts and Pennsylvania filed by those state's attorneys general, court records show.

Zachman in 2013 was a houseguest on Big Brother, a reality television show broadcast on CBS, in which strangers become roommates, create alliances, then vote to evict one another until a final winner is awarded a cash prize.

MV Realty's CEO Antony Mitchell and COO David Manchester are listed as co-defendants in the Florida lawsuit.

Mitchell previously served as CEO of Imperial Holdings, a finance company that settled a class action lawsuit following a 2012 investigation by the U.S. Justice Department where no charges were filed, records show.

MV Realty has consistently maintained in statements to the Record-Eagle that their agreements are new and novel, but also legal, and homeowners know the details about the contract they are signing.

"MV spends substantial time and resources to ensure that it always operates in a way that is consistent with the law," the company said in a statement previously provided to the Record-Eagle.

A national investigation by the Better Business Bureau — which now rates the company an "F" after its former "A-" — plus details included in civil complaints filed by state attorneys general in Florida, Massachusetts and Pennsylvania — describe telemarketing violations, confusing contracts and subterfuge.

"Frequently, a notary arrives at the home with only one copy of the HBA paperwork," a complaint filed Nov. 29 by Florida AG Ashley Moody states.

"Consumers state that they were not able to see the HBA or have it explained to them during the home visit," the court filing goes on. "Further, notaries who have notarized the HBAs signed by consumers state that they were advised not to explain the HBA to consumers before they sign."

An alert posted to an online discussion forum for notaries, the Signing Agent Network's Notary Café, warns members away from taking assignments from MV Realty, and accuses the company of targeting vulnerable people.

"Some of the public places MV Realty's notaries have previously met with Pennsylvania consumers include the parking lot of a Dunkin' Donuts, a booth at Eat 'N Park restaurant, and a parking spot on the street in Center City Philadelphia," court documents filed Dec. 13 by Pennsylvania AG Josh Shapiro state.

"Multiple consumers signed the pages of MV's Homeowner Benefit Agreement while leaning against the hood of the MV Realty notary's car," the court filings state.

In Pennsylvania, MV Realty also is accused of conducting business without registering "MV Realty of Pennsylvania, LLC" as a business entity, records show.

The company is registered in Michigan, corporate filings show.

Camille Campbell, a licensed real estate agent with Coldwell Banker's Traverse City office, previously shared concerns about HBP with colleagues, clients and the Record-Eagle, and said the contracts spurred a troubling buzz throughout the industry.

A colleague in North Carolina, for example, contacted Campbell to report MV Realty booths have popped up at farmers' markets there.

The specifics of their Homeowner Benefit Program are this: In exchange for what MV Realty advertises on their website as an up-front payment of between $300 and $5,000, homeowners sign a contract stating that, if they decide to sell, MV Realty has the exclusive right to list their home on commission, generally 6 percent.

A memorandum referencing the HBP is sent to the Register of Deeds in the county where the home is located and recorded as a 40-year lien against the property.

If the homeowner defaults during the 40 years, whether by losing the home through foreclosure, listing the home with another Realtor or listing it for sale by owner, the homeowner owes MV Realty an early termination fee equal to 3 percent of the property's fair market value, as determined by MV Realty.

Court records show some homeowners who signed HBP contracts and later listed their property for sale by owner, received correspondence from MV Realty stating they were liable for the termination fee, "the consideration" they'd received — meaning the up-front payment — as well as interest, costs and MV Realty's attorney fees.

Homeowners also waive their rights to be party to a class action lawsuit, agree to allow MV Realty to use photographs of them in company marketing materials and agree MV Realty can delegate some or all of its obligations to others, a copy of the agreement provided to the Record-Eagle states.

In contrast, a standard listing agreement from a licensed Realtor in Michigan typically lasts three, six or 12 months, said Chris Lambert, co-owner of Northern Title Agency.

"It is creating clouds on title," Lambert said, explaining the term means any encumbrance that puts ownership of the real estate into question.

When lenders loan money to a customer, Lambert said, they need all property owners to sign a mortgage. If there is a "cloudy possibility" that someone else might have an interest in the property, then that additional person has to sign the mortgage, too, or the bank will not lend the money.

"If the defect in title is bad enough, then the title to the property becomes what's labeled as 'unmarketable,' " Lambert said.

There are no reports of local properties being labeled unmarketable, yet Haines said refinances, home equity loans and property inheritance or transfer can be denied, delayed or complicated when a property has an HBP attached.

A spokesperson with Michigan's Attorney General's office said no complaints had been logged with their office about the company's activities in Michigan.

In December, federal watchdogs fielded concerns about HBP-type contracts, following a Dec. 21 letter signed by U.S. senators from Minnesota, Ohio and Oregon.

"Recent reporting raises serious concerns about potentially predatory and coercive practices by real estate firms, like MV Realty, and several state attorneys general are taking action," the letter, signed by Tina Smith, D-Minnesota; Sherrod Brown, D-Ohio; and Ron Wyden, D-Oregon, stated.

The senators are asking the Consumer Financial Protection Bureau and the Federal Trade Commission to review whether the contracts violate consumer protection laws.

Calls to the Grand Traverse County homeowners, who records showed had signed these agreements, either were not returned or they declined to speak on the record.

But one homeowner said they'd signed the agreement when they were at a low point financially and they did not want their participation, or the $1,200 they were paid, to be publicized.

MV Realty said in a statement that the company only reaches out to individuals who have submitted inquiries requesting information either to MV directly or through third-party websites, which are then directed to MV from consumers who consent to receive information.

Court filings, however, accuse the company of violating state telemarketing statutes by calling consumers who registered their phone numbers with the national Do-Not-Call Registry, by using pool numbers that deceptively simulate local calls, then bombarding consumers with pre-recorded voicemail messages.

A Texas homeowner who registered her phone number with the national registry, received a $2,000 default judgment against MV Realty earlier this year for this type of activity, records show.

Mabel Arredondo of El Paso County said she wasn't interested in an HBP, but told the caller she might consider their offer "for the sole purpose of identifying who was calling and/or the company who was responsible for calling."

An agent with MV Realty emailed Arredondo an HBA contract, court records show, Arredondo asked the company to stop calling her, they did not, she filed suit and won by default when MV Realty did not respond to court filings.

No such suits have been filed locally, records show.

Kim Bush, with Michigan's AG's office, said residents who want to file a complaint with their office can do so online at: Michigan Attorney General Consumer Complaint Form (state.mi.us).