Maine's governor signed new legislation last week, applying comprehensive regulations to originations of home equity investment products in classifying them as "residential mortgage loans."
Gov. Janet Mills signed the bill into law following early April passage in both chambers of the state's legislature. In labeling HEIs as "shared appreciation mortgage loans," bill LD 1901 requires regulation and oversight of the products in a manner
"This legislation applies comprehensive boundaries to a complex financial product that is often marketed and sold without regard for the long-term impacts on homeowners," said National Consumer Law Center senior attorney Andrea Bopp Stark in a press release, while praising the transparency it would bring. NCLC provided technical assistance for the bill's development and testified in support.
Rep. Art Bell, D-Yarmouth, served as sponsor of the legislation, which also received support from the Maine Bureau of Consumer Credit Protection.
The bill went into law immediately after signing, with HEI agreements now subjected to new regulations, including:
- Mandatory consumer counseling prior to origination, conducted by an approved federal or state agency.
- The presence of independent legal counsel to assist customers prior to the transaction in order to counter future claims of unfair or deceptive trade practice.
- Assignment of liability to secondary market investors due to HEIs' classification as "high-cost mortgage loans" in the case of any legal action from the homeowner.
- Disclosure of annualized costs, payment amount at settlement and equivalent annual percentage rate for each year of the agreement based on a real estate appreciation index, as well as periodic statements.
- Prohibition against added fees or a different settlement formula from previously agreed-upon terms for prepayment or early termination.
- Prohibitions against any unreasonable restrictions that would prevent the homeowner from renting out their property.
- Prohibitions against provisions that would prevent the homeowner from obtaining a rate-and-term refinance on the secured property, with the HEI provider agreeing to subordinate the interest on its agreement.
The bill subjects shared appreciation agreements to the Maine Consumer Credit Code, which took effect on Oct. 29, 2025, thereby nullifying any HEIs originated after that date.
Known by various names, including home equity investments or shared-appreciation agreements, the products allow consumers to take out a percentage of accrued value in their properties through a signed contract. The agreements come with no requirement of regular repayment or interest due until the end of their term or early termination. Once the contract ends, a full lump sum becomes due along with a previously agreed-upon rate of appreciation.
Providers of the contracts have found themselves subject to numerous lawsuits and enforcement actions in several states, with their clients claiming they did not fully understand the nature of the products or the extent of the lump-sum balloon payment owed at the end of their term. Lawyers have accused providers of "deceptive" marketing tactics that could lead to dire consequences, including foreclosure.
The HEI industry reacts
An earlier proposal included within the legislation would have restricted liens taken against any property covered by HEI contracts and turn into a de facto prohibition against providers. Although that provision was eliminated from the final version, the new obstacles imposed from the signed bill "will effectively ban" HEI products
Following passage in the legislature earlier this month, the Coalition for Home Equity Partnership, a trade group representing HEI firms, quickly called for Gov. Mills to veto the bill.
"The passage of LD 1901 will have real consequences for Maine families, business owners and seniors during a time of growing financial uncertainty. Lawmakers set out to protect homeowners but instead passed legislation built on a flawed foundation that makes it operationally impossible for shared equity providers to serve them," said CHEP President Cliff Andrews prior to Mills' signing.
"We are not asking to operate without accountability; we are asking for a framework we can comply with," he added.
The latest development represents a new regulatory setback for growth in the segment, which has seen several
Leaders of HEI firms regularly emphasize their wishes to carve out a path distinct from mortgage lenders and in the past, sometimes sought to avoid classification of their offerings as "home loans" or customers as "borrowers," which might subject them to a stringent degree of banking regulation. Some home affordability advocates, including the Urban Institute, have also come out to support the industry.
On the opposing side are consumer advocates and lawmakers. Legal suits brought against HEI providers have argued their products meet the definition of mortgages, and the companies should adhere to the same laws as home lenders.
Recent rulings suggest lawmakers may be more receptive to consumer arguments. A 2025 Washington State ruling explicitly described the HEI product offered by San Francisco-based firm Unison as a reverse mortgage. Currently, Boston-based Hometap is involved in a lawsuit brought by its state's attorney general, who made similar claims.
Unison, a pioneer in the space, agreed to settle the Washington State case late last year but currently
