House Commerce hearing exposes split over whether shared-appreciation home agreements should be regulated as mortgages

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 due. Andrew Pizer of the National Consumer Law Center told the panel "shared-appreciation agreements are high-cost loans" that can drain homeowner equity and that regulators could require scenario-based disclosures to illustrate likely outcomes.

Industry witnesses representing the Coalition for Home Equity Partnership (CHEP), Point Digital Finance and companies such as Hometap defended the products as an option for homeowners who prefer not to take on monthly payments. Cliff Andrews, president of CHEP, said the industry supports regulation but called the bill as written "unworkable" and said it would act as a de facto ban. Matthew Windsor of Point Digital Finance and Jim Riccitelli of Unlock Technologies cited Urban Institute analysis and other studies they said show many users choose the product for flexibility and are not a disproportionately vulnerable population.

Industry witnesses described two basic contract structures used by providers: a multiplier model and a shared‑value model. Under the multiplier example used in testimony, a homeowner who takes 25% of a home’s value up front might face an effective annualized cost in the low double digits at settlement, depending on the contract multiplier and home‑price appreciation. Companies said they cap investor returns — often at about 20% annually — and provide quarterly statements and rescission periods to reduce surprise at maturity.

Committee members pressed both sides on technical issues: how to present costs without a single APR, how to calculate likely payoffs for 10‑ and 30‑year terms, how risk adjustments to starting appraisals affect homeowner outcomes, and whether the industry’s disclosures are sufficiently clear for consumers. Several members asked the industry to provide concrete payoff examples for the committee to review.

Representative Venkat, a sponsor of the bill, also told the committee she had received an industry solicitation offering a $50 Amazon gift card for testimonial submissions and called the tactic "an outrageous corruption of our legislative deliberative process," asking witnesses to explain the solicitation and any compensation related to research cited in industry materials.

The hearing did not produce a committee vote on HB 21-20. Sponsors and members said they still need to decide whether to fit shared-appreciation agreements into the existing Act 6 mortgage framework and tailor regulations through the Department of Banking and Securities, or to craft a new statutory approach that addresses contract mechanics and disclosure. The committee adjourned after hearing additional testimony from homeowners and housing policy experts.

What’s next: Committee members asked staff and witnesses for more concrete calculations and examples the committee can use to evaluate the bill’s practical effects; sponsors said they will continue to work with regulators and stakeholders on drafting details that could address both consumer-protection and industry-operability concerns.