Debate over shared‑equity home investments pits industry innovation against consumer protection
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Summary
Industry coalition backing H.1106/S.705 urged a tailored regulatory framework for shared‑equity home‑investment products; opponents, including the Attorney General’s office and consumer advocates, warned these contracts can behave like disguised mortgages that strip homeowners of equity and increase foreclosure risk.
Two separate but related categories of legislation drew sustained debate: H.1106 / S.705, which would create a regulatory regime for “home equity investment” (HEI) or shared‑equity products, and H.1145 / S.731, framed by consumer advocates as a bill to regulate certain mortgages and protect homeowners from predatory shared appreciation arrangements.
Industry witnesses — including Jeffrey Glass, CEO of Hometap, and representatives of Point Digital Finance and Unlock Technologies — said shared‑equity products give homeowners non‑debt options to access home value without monthly payments. They asked the committee for licensing, price caps, plain‑language disclosures, underwriting standards and a rescission period. “Our product allows a homeowner to access value without taking on more monthly payments or additional debt,” said a coalition representative.
Consumer advocates and victims offered starkly different accounts. Andrea Bob Stark of the National Consumer Law Center and lawyers representing plaintiffs described cases in which homeowners lost most of their equity under shared appreciation arrangements or were exposed to large future lump‑sum obligations. The Attorney General's Consumer Protection Division (Yael Shavit) testified in opposition to H.1106/S.705, saying that the bill would effectively legitimize products the office has sued and could leave homeowners at risk of losing their homes. The AG’s office provided a recent complaint and affidavits as part of its testimony and argued that some HEI products functionally act as mortgage loans and should not be exempted from existing protections.
Victims and community advocates described specific harms. One homeowner said a shared appreciation product left him with almost nothing from a sale; others described counseling gaps, obscure contract language and loan splitting between affiliated entities.
Industry witnesses countered with consumer‑protection proposals: statutory price caps, required disclosures, independent valuations, and a three‑day rescission period. They noted that Connecticut, Illinois, and Maryland have regulated similar products and argued for a tailored statutory approach rather than a flat prohibition.
The committee asked detailed questions about underwriting, notice to first‑mortgage lenders, how caps would be calculated, and whether independent counseling should be required. Neither side asked for immediate committee action; the AG urged stronger consumer protections or repeal of statutes that previously insulated some providers.
Outcome and next steps: Committee members asked sponsors and stakeholders to reconcile proposals and to provide comparative analysis of consumer outcomes and existing litigation findings before further action.
