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A Broker Price Opinion or BPO is a report performed by a real estate broker
usually on behalf of a bank or mortgage holder to determine the approximate
value or potential sales price of a real estate property. BPOs are often
used as a tool by a mortgage holder to value property it holds an interest
in after a borrower is late with a payment or defaults on a residential
loan. BPOs tend to be less expensive than appraisals, and can be performed
quicker than appraisals, and often can be completed without access to
the property itself.
Mortgage agreements allow banks and mortgage holders to pass through the
costs of getting BPOs from third party real estate brokers directly to
the borrowers. However, mortgage agreements prohibit a bank and mortgage
holder from marking up the cost they pay for BPOs. In other words, a borrower
can be charged for a BPO, but only in the amount that the bank or mortgage
holder paid for the BPO. These fees cannot be a profit center for the lender.
Based on our investigation to date, some banks, including Santander Bank
(formerly Sovereign Bank), utilizes an automated software system to order
BPOs from brokers after a borrower is found to be late with a payment
or defaults on a residential loan. The system then marks up cost of the
BPO fee, and bills borrowers the increased BPO fee. This mark up breaches
the terms of the mortgage agreement and violates consumer protection laws,
costing homeowners higher fees for BPOs than permitted.
When a homeowner is late with a payment or in default on a residential
loan, they are in a vulnerable position. When this happens, the lender
sometimes chooses to engage in business practices that are considered
unsavory and which unfortunately prey on these vulnerable homeowners.
These practices are designed to maximize the fees assessed on the borrowers’
account – along with the costs associated with the original default
of the mortgage.
Other mortgage companies have been sued for marking up BPO fees. For example,
in the United States District Court for the Northern District of California,
in the case
Bias v. Wells Fargo & Co., Case number 4:12-cv-00664, another mortgage company was accused of engaging
in a similar practice regarding BPOs. In October of 2016, the mortgage
company agreed to settle the case for $50 Million, payable to a nationwide
class of more than 250,000 borrowers.
If you or someone you love has been a victim of paying for improperly marked-up
Broker Price Opinions, please contact Golomb & Honik, P.C. today at
(215) 278-4449, or fill out our confidential
contact form. The national consumer protection lawyers at Golomb & Honik, P.C.
have successfully represented individuals in Pennsylvania, New Jersey,
and throughout the United States.