Massachusetts Attorney General Andrea Joy Campbell issued a rule on November 6 governing shared appreciation mortgages (SAMs), a product that ties repayment to future home price appreciation. The rule adds disclosure requirements and consumer protection standards for nonprofit SAM lenders.
The regulation stems from a provision in Massachusetts' economic development bill passed in November 2024. That law created a broad liability waiver for certain nonprofit SAMs, including loans from BlueHub Capital. The National Consumer Law Center (NCLC) said the legislative change opened a "dangerous loophole" for distressed homeowners.
Under the BlueHub model, borrowers receive a fixed-rate first mortgage plus a second lien tied to home price appreciation. When the property sells, transfers, or refinances, the homeowner must share a portion of any value increase with the lender. Because the payoff amount is variable, borrowers can face large, unexpected balloon payments.
The Humes v. BlueHub Capital Inc. class-action lawsuit found BlueHub liable for violating multiple state lending laws. The court certified the class to proceed.
The AG's rule establishes when nonprofit SAM lenders gain liability protection and requires clear disclosure of the maximum possible repayment obligation. The regulation does not eliminate SAMs but seeks to ensure transparency and defined consumer protections.
NCLC praised the change but said it does not address home equity investments (HEIs), a growing category where homeowners receive upfront cash in exchange for a share of future home price appreciation. "The new rules provide important safeguards and requirements for SAMs, and stronger and broader rules are needed to address the high-risk HEI loans that are now targeting Massachusetts homeowners," NCLC senior attorney Andrea Bopp Stark said.
Massachusetts AG Campbell has already challenged HEI provider Hometap over consumer protection violations. The NCLC urged additional state action to close gaps in oversight of equity-based mortgage products.
Other states face similar challenges. In August, HEI provider Unlock settled with the Minnesota Attorney General over allegations that home equity agreements violated state usury caps, disclosure rules, and licensing requirements. The Ninth Circuit Court of Appeals ruled in 2024 that Unison's HEI product amounted to a reverse mortgage under Washington state law.