A group of Senate Democrats recently urged the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) to review the use of exclusive listing agreements by real estate brokerage firms.
The inquiry comes after several reports of companies like MV Realty allegedly misleading families into entering 40-year exclusive listing agreements. This can make it difficult for homeowners to refinance and often result in losing up to three percent of their home’s value when they resell.
“MV Realty, and companies like it, take tens of thousands of dollars from homeowners in exchange for a minimal up-front payment. By advertising these agreements as a ‘loan alternative,’ companies are attempting to avoid the legal limitations on lending while, in essence, charging borrowers onerous rates,” the senators wrote to federal regulators. “We urge the CFPB and FTC to work with state attorneys general to review whether these listing agreements and business practices violate federal consumer protection laws, including prohibitions against unfair, deceptive, or abusive acts and practices, and to take appropriate action where violations are found.”
It was signed by U.S. Sens. Sherrod Brown (D-OH), Tina Smith (D-MN), and Ron Wyden (D-OR).
Earlier this week, Brown sent a letter asking manufactured housing investor Legacy Communities to halt drastic rent increases in Ohio manufactured home communities. Last week, Brown sent a letter to VineBrook Homes Trust after multiple Cincinnati residents reported neglectful ownership practices.
In addition, Brown has called on the CFPB to take action against mortgage servicers that violate the law by attempting to foreclose on homeowners for “zombie” second mortgages borrowers don’t even know they have.