Monroe Capital, Alleged ‘architect’ Of Mv Realty Scheme, Under Fire In New Lawsuit

The turmoil surrounding right-to-list agreement firm MV Realty has extended to Monroe Capital.

The middle-market lender allegedly played a central role in financing and directing MV Realty’s nationwide predatory lending scheme, according to a lawsuit filed on Wednesday in the U.S. District Court for the District of Maryland. 

The suit, which is seeking class-action status, was filed by plaintiffs Justin Keller, Hailey Kardux and Patricia Bandy. 

In their filing, the plaintiffs claim that Monroe Capital provided MV Realty with a $40 million credit facility and oversight, which they say allowed MV Realty to expand its Homeowner Benefit Agreement (HBA) program into 33 states. According to the complaint, Monroe Capital approved marketing strategies and directly influenced the program’s strategy.

Under the HBA program, a homeowner  signs over the right to list their home for up to 40 years in exchange for a nominal one-time cash payment. MV Realty has come under fire from several state attorneys general for the program and many states have enacted legislation banning the agreements and preventing their enforcement. 

“These agreements stripped homeowners of control over their property and access to equity,” said Drew LaFramboise of Joseph Greenwald & Laake, one the law firms representing the plaintiffs. “And Monroe Capital was the architect of this scheme’s nationwide rollout.”

The lawsuit accuses Monroe Capital of violating the federal Racketeer Influenced and Corrupt Organizations Act (RICO), and the Sherman Antitrust Act, as well as state consumer protection laws.

According to the suit, both Keller and Kardux are Maryland residents who were unable to sell their home due to the terms of their agreement with MV Realty, while Bandy, a North Carolina resident, was forced to pay MV Realty over $10,000 to exit her agreement with the firm so she could sell her property. 

“For homeowners, their home is their largest asset. And homeowners are just one disaster—like the loss of a job or the illness of a loved one—from needing access to their home’s equity to stay afloat,” said Thomas W. Keilty of Keilty Bonadio, the second of two law firms representing the plaintiffs.

The proposed class for the lawsuit would encompass over 38,000 homeowners, whose properties were part of the HBA program. 

Monroe Capital did not return a request for comment.