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House Commerce hearing exposes split over whether shared-appreciation home agreements should be regulated as mortgages
Summary
At a House Commerce Committee hearing on HB 21-20, industry representatives urged tailored regulation and warned the bill would function as a de facto ban on shared-appreciation agreements; consumer advocates and legal experts urged classifying the contracts as residential mortgages under Act 6 to impose interest caps and foreclosure protections.
Harrisburg — Lawmakers and witnesses sparred Tuesday as the House Commerce Committee examined House Bill 21-20, which would clarify that so-called shared-appreciation agreements are residential mortgages under Pennsylvania’s Act 6 and therefore subject to usury caps and mortgage foreclosure protections.
"If it looks like a duck, walks like a duck, quacks like a duck," said Ian Charlton, an attorney with Community Legal Services, urging the committee to treat the contracts as mortgages so homeowners receive established safeguards such as interest-rate caps and the statewide right to cure. Charlton told members his office has tracked more than 2,000 recorded agreements in Pennsylvania in recent years and warned many borrowers’ contracts have not yet matured.
Backers of HB 21-20 — including legal-aid and consumer-advocacy groups — said the agreements involve upfront cash secured by liens and large lump-sum payoffs that can create a risk of forced sales when the balloon payment comes…
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