Key facts
- The rule sets out when nonprofit shared appreciation mortgage lenders are shielded from state consumer protection claims.
- Lenders must prominently disclose the maximum amount a borrower may have to repay under the loan.
- The rule stems from a provision in a state economic development bill passed in November 2024.
- The National Consumer Law Center said the rule does not specifically regulate home equity investment products.
- Massachusetts Attorney General Andrea Joy Campbell has challenged home equity investment provider Hometap, alleging consumer protection violations.
The Massachusetts Attorney General's Office has issued a final rule governing shared appreciation mortgages, a home equity product in which a borrower shares part of any increase in a home's value with the lender. The rule took effect on November 6, 2026, according to an announcement from the National Consumer Law Center.
The regulation sets out the limited circumstances in which a nonprofit shared appreciation mortgage lender is shielded from claims under the state's consumer protection law, and it requires prominent disclosure of the maximum amount a borrower may have to repay. The rule follows a provision in a state economic development bill passed in November 2024 that granted a broad waiver of liability for certain nonprofit shared appreciation mortgages, including loans originated by BlueHub Capital.
Under the BlueHub-style model, a borrower typically receives a fixed-rate first mortgage alongside a second lien tied to future home price appreciation. Because the payoff amount is not fixed in dollars at origination, borrowers can face large balloon payments when they sell, transfer or refinance the home.
The National Consumer Law Center said the risks of these structures were set out in Humes v. BlueHub Capital Inc., a Massachusetts class-action lawsuit alleging the loans carry hidden, subprime-level costs. The court found BlueHub liable for violating multiple state lending laws and certified the class to proceed, according to the center.
"While presented as a lifeline, shared appreciation mortgages often become a trap," Andrea Bopp Stark, a senior attorney at the National Consumer Law Center, said in a statement. She said the rule protects borrowers from the BlueHub loan model and similar products but that the state must go further on more common home equity products, including home equity investment loans.
The center said the rule does not specifically regulate home equity investments, which give a homeowner upfront cash in exchange for a share of future price appreciation. Massachusetts Attorney General Andrea Joy Campbell has already challenged one such provider, Hometap, alleging consumer protection violations tied to the structures.
Elsewhere, the Ninth Circuit Court of Appeals overturned a 2023 district court judgment in Washington state and ruled that Unison's home equity investment product amounted to a reverse mortgage under state law, the report said. In August, provider Unlock settled with the Minnesota Attorney General's Office over allegations that its home equity agreements were mortgage loans that violated state usury caps, disclosure rules and licensing requirements.
Dan McPheeters, Point's head of business development and partnerships, told HousingWire at the Mortgage Bankers Association's Annual Convention & Expo that he believes such companies will be regulated.