Key facts
- Matt Windsor, deputy general counsel at Point, is advocating for regulatory clarity in the home equity investment (HEI) space.
- He believes current regulatory uncertainty leads to confusion and lawsuits for consumers and originators.
- Point is actively engaging with lawmakers and regulators, including providing feedback on a Senate bill to classify HEIs as residential mortgages.
- The company has implemented a robust internal compliance program, including licensed mortgage loan originators and consumer counseling.
- Point highlights homeowner protection caps as a key safeguard against excessive costs for borrowers.
The home equity investment (HEI) sector is experiencing significant growth, but a lack of clear regulatory guidelines is creating confusion and leading to legal challenges. Matt Windsor, deputy general counsel at Point, is actively working to establish product-specific regulatory frameworks to protect homeowners and provide certainty for HEI originators.
Windsor stated that both consumers and HEI originators are uncertain about applicable licensure, underwriting, and disclosure requirements, which he believes contributes to lawsuits. He emphasized that in the absence of legislative or regulatory clarity, the judicial system becomes the only avenue for resolution. To address this, Point is engaging directly with lawmakers and regulators, offering feedback on a new Senate bill that proposes classifying HEIs as residential mortgages.
Point has proactively built an internal compliance program to prepare for future regulations. This includes ensuring all sales professionals are licensed mortgage loan originators and that many homeowners receive HEI counseling from independent HUD-certified housing counselors, with disclosures adhering to regulatory requirements. Windsor noted that Illinois has already adopted a product-specific regulatory framework for HEIs, which Point has found helpful.
Regarding the Senate bill, Windsor expressed optimism about Senator Jeff Merkley's engagement and the recognition of the need for HEI products. However, he pointed out that the current legislative text lacks vital product-specific details, suggesting that modifications to federal regulations would benefit homeowners with improved access and pricing. Point has not observed an increase in consumer disputes, attributing this to their proactive licensure strategy, strong compliance program, enhanced disclosures, and consumer education, including mandatory counseling for many homeowners.
Point is collaborating with industry groups like the Coalition for Home Equity Partnership (CHEP) to advocate for clear legal frameworks and strong consumer protections, such as licensure, homeowner protection caps, mandatory counseling, and marketing restrictions. Windsor highlighted that homeowner protection caps, typically limiting investor returns to 18%-20% annually, are crucial safeguards, and Point has included them in all contracts since its inception. He noted that uncapped contracts have resulted in significant litigation.