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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 Legaltoday at (215) 278-4449, or fill out our confidential contact form. The national consumer protection lawyers at Golomb Legalhave successfully represented individuals in Pennsylvania, New Jersey, and throughout the United States.