Home‑equity investments and shared‑appreciation agreements draw mixed testimony; consumers praise access, advocates warn of balloon risks
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Summary
Homeowners who testified said shared‑appreciation/home‑equity investments (HEIs) can be a lifeline when traditional credit is unavailable; consumer advocates and the National Consumer Law Center warned HB 5209 is needed to protect older and cash‑poor owners from large lump‑sum payoffs and loss of lifetime equity.
The committee heard competing views on HB 5209, which would impose additional consumer protections on shared‑appreciation agreements (also called home‑equity investments, HEIs, or SAAs).
Several Connecticut homeowners described how HEI products — most commonly offered by licensed lenders such as Point and others — allowed them to preserve ownership or pay urgent bills when HELOCs, refinances or traditional loans were unavailable or unaffordable. Eric Verona said the product "will allow me to save my home" when other credit options did not fit his limited income; another homeowner said independent counseling, online modules and written disclosures were required before funding.
Industry representatives (Point, Unlock Technologies and the Coalition for Home Equity Partnership) said the market is regulated in Connecticut, noted licensing and Department of Banking oversight, and warned that provisions in HB 5209 — a statutory usury cap, a requirement that originators offer refinancing at market rates at contract termination, and a mandatory third‑party fee split — would be unworkable and could drive providers out of state.
Consumer advocates including the National Consumer Law Center urged stronger safeguards. Andrew Heizer said HB 5209 would prevent abusive terms and preserve homeownership for at‑risk homeowners, noting the product’s characteristic large balloon payment at maturity and its targeting of older or house‑rich, cash‑poor households.
The committee heard industry technical suggestions and civilians’ personal accounts and requested follow‑up on specific draft provisions including the fee cap, housing counseling requirements and any mandatory refinancing mandate.
No formal action was taken at the hearing.