An Act to Regulate Shared Appreciation Agreements Relating to Residential Property

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STATE OF MAINE
_____
IN THE YEAR OF OUR LORD
TWO THOUSAND TWENTY-SIX
_____
H.P. 1272 - L.D. 1901
An Act to Regulate Shared Appreciation Agreements Relating to Residential
Property
Emergency preamble. Whereas, acts and resolves of the Legislature do not
become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, shared appreciation mortgage loans are a new form of equity-based
financing; and
Whereas, this legislation enacts statutory provisions to regulate shared appreciation
mortgage loans as mortgage loans and directs the Department of Professional and Financial
Regulation, Bureau of Consumer Credit Protection to enforce those provisions; and
Whereas, immediate enactment of this legislation is necessary for the protection of
consumers; and
Whereas, in the judgment of the Legislature, these facts create an emergency within
the meaning of the Constitution of Maine and require the following legislation as
immediately necessary for the preservation of the public peace, health and safety; now,
therefore,
Be it enacted by the People of the State of Maine as follows:
PART A
Sec. A-1. 9-A MRSA §1-110, sub-§3, as enacted by PL 1981, c. 218, is amended
to read:
3. First lien mortgages Mortgages on real estate granted by a creditor subject to
licensing by the administrator as set out in section 2‑301.
Sec. A-2. 9-A MRSA §1-301, sub-§14, ¶D is enacted to read:
D. "Consumer loan" includes a shared appreciation mortgage loan.
Sec. A-3. 9-A MRSA §1-301, sub-§17, as amended by PL 2021, c. 245, Pt. A, §2,
is further amended by amending the 5th blocked paragraph to read:
APPROVED
APRIL 13, 2026
BY GOVERNOR
CHAPTER
653
PUBLIC LAW
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"Creditor" includes a mortgage loan servicer and a shared appreciation mortgage loan
lender.
Sec. A-4. 9-A MRSA §1-301, sub-§19, ¶A, as amended by PL 2011, c. 427, Pt.
D, §6, is further amended by amending subparagraph (7) to read:
(7) Premiums or other charges for credit life, accident, health or loss-of-income
insurance or insurance against loss of or damage to property or against liability
arising out of the ownership or use of property, written in connection with a credit
transaction, unless the applicable requirements of section 2 ‑501 and Article 8 ‑A
are met; and
Sec. A-5. 9-A MRSA §1-301, sub-§19, ¶A, as amended by PL 2011, c. 427, Pt.
D, §6, is further amended by amending subparagraph (8) to read:
(8) Discounts for the purpose of inducing payment by a means other than the use
of credit.; and
Sec. A-6. 9-A MRSA §1-301, sub-§19, ¶A, as amended by PL 2011, c. 427, Pt.
D, §6, is further amended by enacting a new subparagraph (9) to read:
(9) Equity share payment amount as defi ned in section 8-506, subsection 1,
paragraph F-1.
Sec. A-7. 9-A MRSA §1-301, sub-§37-A is enacted to read:
37-A. Shared appreciation mortgage loan. "Shared appreciation mortgage loan"
means a writing evidencing a transaction or any option, any future or any other derivative
between a person and a consumer according to which the consumer receives money or any
other item of value in exchange for an interest or future interest in a dwelling or residential
real estate or a future obligation to pay an amount based on the value of the dwelling or
residential real estate that is secured by a mortgage, a deed of trust or an equivalent
consensual security interest in the dwelling or residential real estate on the occurrence of
an event, such as the transfer of ownership; a maturity date; the death of the consumer; or
any other event contemplated by the writing. "Shared appreciation mortgage loan" does
not include any shared appreciation mortgage loan extended through a federal or state
government agency, a government-sponsored enterprise or a municipal agency or
enterprise of the State.
Sec. A-8. 9-A MRSA §1-301, sub-§37-B is enacted to read:
37-B. Shared appreciation mortgage loan lender. "Shared appreciation mortgage
loan lender" means a person that extends a shared appreciation mortgage loan secured by
a dwelling or residential real estate.
Sec. A-9. 9-A MRSA §8-504, sub-§2, as amended by PL 2013, c. 464, §4, is
further amended to read:
2. Rule-making authority. Consistent with the purposes of Title X and Title XIV of
the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-
203 and with the purposes set forth in sections 1‑102 and 8‑502 and notwithstanding other
law, the administrator may adopt rules substantially similar to or that afford more protection
for consumers than those codified in 12 C ode of Federal Regula tions, Part 1026 and 12
Code of Federal Regulations, Part 1013. Ru les adopted pursuant to this subsection are
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routine technical rules as defined in Title 5, chapter 375, subchapter 2‑A. In adopting rules
pursuant to this subsection, the administrator shall specifically consider whether there is a
substantial an impact on consumer protection before adopting rules affecting the following
provisions of section 8‑506:
A. The rate thresholds pertaining to high-cost mortgage loans in section 8 ‑506,
subsection 1, paragraph H;
B. The prepayment penalties for high-cost mortgage loans in section 8‑506, subsection
2, paragraph D;
C. The assignee liability for high-cost mortgage loans in section 8‑506, subsection 3;
D. The ability to repay in section 8‑506, subsection 4;
E. The prohibition against flipping and the principles of tangible net benefit in section
8‑506, subsection 5; and
F. The enhanced penalties for violations in section 8‑506, subsection 6.;
G. The method to calculate the annualized cost of a shared appreciation mortgage loan
under section 8-506, subsection 1, paragraph A-1;
H. The maximum allowable shared appreciation mortgage loan equity share
percentage to payment amount percentage ratios, as those terms are defined in section
8-506, subsection 1, paragraphs F-2 and J-2;
I. Restrictions on shared appreciation mortgage loans in section 8-506, subsection 5-A;
J. The standards for automated valuation models used by shared appreciation mortgage
lenders pursuant to section 8-506, subsection 5-C, paragraph B;
K. The standards for shared appreciation mortgage loan borrower and homeowner
counseling in section 8-506, subsection 5-D; and
L. The preliminary and closing borrower disclosures for shared appreciation mortgage
loans required in section 8-506, subsection 5-F.
The rules may contain classifications, differentiations or other provisions and may provide
for adjustments and exceptions for any class of transactions subject to this Title that in the
judgment of the administrator are necessary or proper to effectuate the purposes of this
Title, or to prevent circumvention or evasion of or to facilitate compliance with, the
provisions of this Title.
Sec. A-10. 9-A MRSA §8-506, sub-§1, ¶A-1 is enacted to read:
A-1. "Annualized cost" means the annualized cost of a shared appreciation mortgage
loan, expressed as a percentage and calculated as follows: (((settlement
payment/payment amount)^(365/term days))-1), otherwise expressed as
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administrator pursuant to section 8-504, subsection 2.
Sec. A-11. 9-A MRSA §8-506, sub-§1, ¶F-1 is enacted to read:
F-1. "Equity share payment amount" means the settlement payment minus the payment
amount.
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Sec. A-12. 9-A MRSA §8-506, sub-§1, ¶F-2 is enacted to read:
F-2. "Equity share percentage" means th e percentage portion of the value of the
dwelling or residential real estate pledged by the borrower by agreement to the creditor
at the time of consummation of a shared appreciation mortgage loan or later.
Sec. A-13. 9-A MRSA §8-506, sub-§1, ¶H, as amended by PL 2013, c. 464, §8,
is further amended to read:
H. "High-cost mortgage loan" means a resi dential mortgage loan in which the terms
of the loan meet or exceed one or more of the following thresholds or a shared
appreciation mortgage loan in which the te rms of the loan meet or exceed the total
points and fees threshold established in subparagraph (2):
(1) Rate threshold, which, for a residential mortgage loan, is the point at which the
annual percentage rate equals or exceeds the rate set forth in 12 Code of Federal
Regulations, Section 1026.32(a)(1)(i) without regard to whether the residential
mortgage loan may be considered a "r esidential mortgage transaction" or an
extension of "open-end credit" as those term s are set forth in 12 Code of Federal
Regulations, Section 1026.2; and
(2) The total points and fees threshold, which is:
(a) For loans in which the total loan amount is $40,000 or more, the point at
which the total points and fees payable in connection with the residential
mortgage loan less any excluded points and fees exceed 5% of the total loan
amount; and
(b) For loans in which the total loan amount is less than $40,000, the point at
which the total points and fees payable in connection with the residential
mortgage loan less any excluded points and fees exceed 6% of the total loan
amount.
Sec. A-14. 9-A MRSA §8-506, sub-§1, ¶I, as amended by PL 2013, c. 464, §8, is
further amended to read:
I. "Higher-priced mortgage loan" has the same meaning as set forth in the Federal
Truth in Lending Act and its implementi ng regulation, Regulation Z, 12 Code of
Federal Regulations, Section 1026.35(a). "Higher-priced mortgage loan" also includes
a residential mortgage loan, except for a shar ed appreciation mortgage loan, that is a
nontraditional mortgage as described in th e "Interagency Guidance on Nontraditional
Mortgage Product Risks" issued September 29, 2006 and published in 71 Federal
Register, 58609 on October 4, 2006 and as updated from time to time, except that
"higher-priced mortgage loan" does not include a mortgage that does not allow a
borrower to defer repayment of principal or interest.
Sec. A-15. 9-A MRSA §8-506, sub-§1, ¶J-1 is enacted to read:
J-1. "Payment amount" means the proceeds of a shared appreciation mortgage loan
that are disbursed to a borrower by a credito r or disbursed by a creditor to 3rd parties
on the borrower's behalf. "Payment amount" includes the dollar value of the payments
or other consideration made to a borrower by a creditor at the time of consummation
of a shared appreciation mortgage loan or later.
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Sec. A-16. 9-A MRSA §8-506, sub-§1, ¶J-2 is enacted to read:
J-2. "Payment amount percentage" means the percentage portion of the value of the
dwelling or residential real estate disbur sed to the borrower by agreement by the
creditor at the time of consummation of a shared appreciation mortgage loan or later.
Sec. A-17. 9-A MRSA §8-506, sub-§1, ¶L, as amended by PL 2013, c. 464, §8,
is further amended by enacting at the end a new blocked paragraph to read:
"Residential mortgage loan" includes a shared appreciation mortgage loan.
Sec. A-18. 9-A MRSA §8-506, sub-§1, ¶M-1 is enacted to read:
M-1. "Settlement payment" means the dolla r amount that a borrower is expected to
pay to a creditor to settle or pay off a shar ed appreciation mortgage loan, exclusive of
any money advanced by the creditor on behalf of the borrower, subsequent to the
consummation of the loan, for certain homeownership costs including, but not limited
to, property taxes, insurance, owner asso ciation fees and utilities, payable by the
borrower to the creditor under the terms of the shared appreciation mortgage loan.
Sec. A-19. 9-A MRSA §8-506, sub-§1, ¶M-2 is enacted to read:
M-2. "Term days" means the exact number of days between the settlement date of a
shared appreciation mortgage loan and th e settlement payment date of a shared
appreciation mortgage loan or as establishe d by rule adopted by the administrator
pursuant to section 8-504, subsection 2.
Sec. A-20. 9-A MRSA §8-506, sub-§5-A is enacted to read:
5-A. Shared appreciation mortgage loans; restrictions. A shared appreciation
mortgage loan is subject to the following r estrictions and any rules related to these
restrictions adopted by the administrator pursuant to section 8-504, subsection 2.
A. A shared appreciation mortgage loan may not contain a provision that prevents the
borrower from renting the property to another, except that, if the rental otherwise
complies with applicable federal or state la w, regulation and rule, this paragraph does
not prohibit:
(1) A creditor from charging fees or premiums associated with originating a shared
appreciation mortgage loan secured by a non-owner-occupied property;
(2) A creditor from requiring the borrower to obtain usual and customary insurance
coverage associated with such rental; or
(3) A creditor from prohibiting the borrower from entering into a rental or lease
agreement that would extend beyond the ma turity date of the shared appreciation
mortgage loan.
B. A shared appreciation mortgage loan may not contain a provision that prevents the
borrower or the homeowner from refinancing an existing senior mortgage or lien
through a conventional or agency so-calle d rate-and-term refinancing as long as the
principal balance on the new mortgage lo an does not exceed the unpaid principal
balance of the mortgage loan being re financed plus customary and reasonable
transaction costs. The creditor shall agree to subordinate its interest in connection with
the rate-and-term refinancing as set forth in this paragraph.
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C. A shared appreciation mortgage loan may not apply a settlement payment formula
that differs from the formula originally agreed upon or impose any penalties if the
borrower elects to settle or otherwise terminate the shared appreciation mortgage loan
before its scheduled maturity date or termination date.
D. A shared appreciation mortgage loan may not contain mandatory arbitration clauses
and waivers of certain consumer rights in accordance with the prohibition found in 12
Code of Federal Regulations, Section 1026.36(h).
E. A shared appreciation mortgage loan may not include a confidentiality provision
regarding the terms of the shared appreciation mortgage loan.
F. A shared appreciation mortgage loan may not contain a provision permitting the
creditor to extend the term of the shared appreciation mortgage loan unless the
provision requires the express written consent of the borrower to the extension, except
that, and subject to the applicable statut e of limitations, this paragraph may not be
construed to limit or otherwise reduce th e period of time in which the creditor may
pursue legal action related to a borrower's failure to settle the shared appreciation
mortgage loan upon the expiration of the then -current term of the shared appreciation
mortgage. A creditor may unilaterally exte nd the term of the shared appreciation
mortgage loan:
(1) For 30 days if:
(a) The extension occurs at the end of the term; and
(b) The extension is related to a settleme nt or other termination that is in
progress but will not occur prior to the termination of the shared appreciation
mortgage loan or the borrower has requested an extension but will not
complete the written consent prior to the termination of the option period; or
(2) For one year if:
(a) The extension occurs at the end of the term;
(b) The creditor has sent th e borrower at least 3 notices regarding the end of
the term; and
(c) The borrower has not responded or indicated an intent to settle or otherwise
terminate the shared appreciation mortgage loan.
G. A prepayment fee or penalty may not be charged under the terms of or included in
the loan documents of a shared appreciation mortgage loan.
H. A shared appreciation mortgage loan may not include a demand feature that permits
the creditor to accelerate the indebtedness by terminating the shared appreciation
mortgage loan in advance of the original maturity date and to demand repayment of the
entire outstanding balance, except in the following circumstances:
(1) There is fraud or material misrepresentation by the borrower in connection with
the loan or open-end credit agreement;
(2) The borrower fails to meet the pa yment terms of the agreement for any
outstanding balance that results in a default in payment under the loan; or
(3) There is an action or inaction by th e borrower that adversely affects the
creditor's security for the loan or any right of the creditor in the security.
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I. A person who purchases or is otherwise assigned a shared appreciation mortgage
loan is subject to all affirmative claims a nd any defenses with respect to the loan that
the borrower may assert against a creditor of the loan.
J. A creditor may receive the settlement payment amount based only on the appraisal
at settlement of the loan and may not charge additional amounts based on the condition
of the property.
K. In addition to applicable requirements under federal and state law, the creditor shall
disclose prior to consummation of the loan the annualized cost, equity share payment
amount, settlement payment amount and annual percentage rate for each year of the
term of the loan based on a real estat e appreciation index prescribed by the
administrator by rule.
Sec. A-21. 9-A MRSA §8-506, sub-§5-B is enacted to read:
5-B. Shared appreciation mortgage loans; requirements for contents of shared
appreciation mortgage loans. A shared appreciation mortgage loan is subject to the
following requirements.
A. A shared appreciation mortgage loan must contain a provision requiring the creditor
to provide to the borrower at least 90 days' advance written notice of any action
required by the borrower under the terms of the shared appreciation mortgage loan that,
if not timely taken by the borrower, will affect the rights or interests of the borrower,
except that this paragraph does not apply to:
(1) Actions required of the borrower aris ing from a directive or mandate by a
governmental authority related to noncompliance with applicable law that requires
action in fewer than 90 days; or
(2) Matters that cause an imminent threat to the condition of the dwelling, property
or health or safety of the public that are known to the creditor and verified by
internal or external assessment.
B. A shared appreciation mortgage loan must provide for a periodic statement in
accordance with rules adopted by the administrator.
C. A shared appreciation mortgage loan must contain a provision that, within 7
business days of a request from the borrower for information regarding the process for
a final termination or settlement of the shared appreciation mortgage loan, the creditor
shall provide a detailed and accurate writte n statement of the payoff or settlement
process. If determining a settlement amount requires obtaining a 3rd-party valuation,
a creditor is deemed to have complied with this paragraph by providing a written notice
of an estimated total amount required to pay the shared appreciation mortgage loan in
full, as of a specified date, and advising the borrower of the process and estimated cost
for obtaining such 3rd-party valuation. The valuation appraisal under this paragraph
must conform to the requirements of subsection 5-C, paragraph A. The written notice
of an estimated written amount must itemi ze and explain all known charges included
in the total figure stated and estimate all charges that are subject to change.
D. Upon a consumer's default involving a real estate tax or insurance premium
delinquency, if the shared appreciation mort gage loan lender elects to advance funds
to cure the delinquency, the lender shall, at the consumer's request, defer repayment of
the amount of the advance until settlement of the loan without the accrual of interest.
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Sec. A-22. 9-A MRSA §8-506, sub-§5-C is enacted to read:
5-C. Shared appreciation mortgage loans; requirements for property valuation.
The following requirements apply with respect to property valuation.
A. A creditor shall conduct shared appreciation mortgage loan valuation appraisals in
a manner substantially similar to the appr aisal valuation independence standards set
forth in 12 Code of Federal Regulations, Section 1026.42.
B. Shared appreciation mortgage loan transaction automated valuation models are
subject to substantially similar and appli cable quality control standards for automated
valuation models issued by the federal C onsumer Financial Pr otection Bureau and
published as 89 Federal Register, 64538, effective October 1, 2025, or by rule adopted
by the administrator pursuant to section 8-504, subsection 2.
Sec. A-23. 9-A MRSA §8-506, sub-§5-D is enacted to read:
5-D. Shared appreciation mortgage l oans; requirements for counseling. A
creditor may not make a shared appreciati on mortgage loan without first receiving
certification from a counselor with a 3rd-party organization approved by the United States
Department of Housing and Urban Development, a housing financing agency of this State
or the Department of Professional and Financ ial Regulation, Bureau of Consumer Credit
Protection that the borrower or the homeown er has received counseling that includes a
review of the borrower's or homeowner' s needs and circumstances; homeowner and
property eligibility; shared appreciation mort gage loan features and costs; issues and
obligations after closing; and financial alte rnatives to the shared appreciation mortgage
loan.
Sec. A-24. 9-A MRSA §8-506, sub-§5-E is enacted to read:
5-E. Shared appreciation mortgage loans; requirement for 3-day right of
rescission. A creditor shall offer each shared appreciation mortgage loan borrower a 3-day
right of rescission period in a manner substantially similar to the requirements in 12 Code
of Federal Regulations, Section 1026.23.
Sec. A-25. 9-A MRSA §8-506, sub-§5-F is enacted to read:
5-F. Shared appreciation mortgage loans; required disclosures. Before a shared
appreciation mortgage loan agreement is entered into, a shared appreciation mortgage loan
lender shall provide the disclosures established by rule adopted by the administrator under
section 8-504, subsection 2.
Sec. A-26. 9-A MRSA §8-506, sub-§5-G is enacted to read:
5-G. Shared appreciation mortgage loans; consequence of no advice of counsel to
borrower. The following provisions apply regarding the lack of representation by
independent counsel of a borrower.
A. A shared appreciation mortgage loan is presumed to be unconscionable or the result
of an unfair or deceptive trade practi ce unless the borrower was represented by
independent counsel in connection with all aspects of the origination of the shared
appreciation mortgage loan and in the granting and execution of the mortgage. When
the borrower or the borrower's legal counsel successfully raises the presumption that
the shared appreciation mortgage loan w as unconscionable, or was the result of an
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unfair or deceptive trade practice, by a preponderance of the evidence that the borrower
did not have independent legal advice in connection with the transaction, and when the
shared appreciation mortgage loan lender that benefits from the execution of the
mortgage fails to rebut the presumption, th e borrower or the borrower's legal counsel
or personal representative is entitled to avoid the transfer or execution or the mortgage
and entitled to the relief in paragraph C.
B. A civil action may be brought to obtain relief under this subsection by the borrower
or the borrower's legal representative or personal representative.
C. When a court finds that a shared ap preciation mortgage loan was unconscionable
or the result of an unfair or deceptive trade practice under paragraph A, the court shall
grant appropriate relief enabling the borrowe r to avoid the execution of the mortgage
securing the transaction, including the rescission of the mortgage, and such other relief
as the court considers proper. The court shall award reasonable attorney's fees and
costs to be paid by the shared appreciation mortgage loan lender, or by any assignee of
the mortgage, as found by the court. When the court finds that the shared appreciation
mortgage loan's being unconscionable or the result of an unfair or deceptive trade
practice in connection with the transaction is a good and valid defense to any suit to
enforce the terms of the shared appreciati on mortgage loan, the court shall refuse to
enforce the terms of the shared appreciation mortgage loan.
Sec. A-27. 9-A MRSA §8-506, sub-§6, ¶K is enacted to read:
K. A violation of this section constitutes a per se violation of Title 5, section 207 and
of Title 14, section 6113.
Sec. A-28. Report. No later than February 1, 2029, the Superintendent of Consumer
Credit Protection within the Department of Professional and Financial Regulation shall
submit a report to the joint standing committee of the Legislature having jurisdiction over
health coverage, insurance and financial services matters that includes findings and
recommendations regarding the regulation of shared appreciation mortgage loans pursuant
to the Maine Revised Statutes, Title 9-A, including, but not limited to, suggested statutory
changes. The committee may submit legislation related to the report to the 134th
Legislature in 2029.
PART B
Sec. B-1. Shared appreciation mort gage products subject to Maine
Consumer Credit Code. The Legislature adopts the ruling of the Department of
Professional and Financial Regulation, Bureau of Consumer Credit Protection, which took
effect October 29, 2025, that a shared appr eciation mortgage product is a consumer credit
transaction subject to the provisions of the Maine Revised Statutes, Title 9-A applicable to
mortgage loans and that providers of these products are supervised lenders under that Title.
Any shared appreciation mortgage product entered into with a consumer that is secured by
a dwelling or residential real estate in this State between October 29, 2025 and the effective
date of this Act that does not comply with the provisions of that ruling is void and
unenforceable.
Sec. B-2. Retroactivity. This Part applies retroactively to October 29, 2025.
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Emergency clause. In view of the emergency cited in the preamble, this legislation
takes effect when approved.