Massachusetts Attorney General Andrea Joy Campbell's new rule on shared appreciation mortgages, effective Nov. 6, represents a step forward in consumer protection—but it is only a half-measure. The regulation adds disclosure and transparency requirements for nonprofit SAM lenders, clarifying when they are shielded from state consumer protection claims. Yet as the National Consumer Law Center rightly points out, this rule leaves a significant gap: it does nothing to address the fast-growing category of home equity investment products that pose equally serious risks to distressed homeowners.
The backdrop here matters. Massachusetts carved out a broad waiver of liability under its consumer protection laws for certain nonprofit SAMs, including loans originated by BlueHub Capital, through a provision in the state's economic development bill passed in November 2024. This legislative change created what advocates accurately called a 'dangerous loophole.' The BlueHub-style model saddles borrowers with a fixed-rate first mortgage plus a second lien tied to future home price appreciation. Because the payoff amount is variable—not set in dollars at origination—borrowers can face unexpectedly large balloon payments when they sell, transfer, or refinance. The Humes v. BlueHub Capital Inc. class-action lawsuit, which the court recently certified to move forward, demonstrates the real harm: SAMs can embed hidden, subprime-level costs that strip significant equity and accelerate home loss.
The AG's new rule does provide important protections. It establishes a framework for robust disclosures, including clear presentation of the maximum possible repayment obligation. It defines the limited circumstances in which a SAM lender can be insulated from consumer protection claims. These requirements matter. But Andrea Bopp Stark, senior attorney at the National Consumer Law Center, captured the problem precisely: 'While presented as a lifeline, shared appreciation mortgages often become a trap. The AG's final rule protects people from BlueHub's loan model and similar products, but Massachusetts must go further to prevent harm from more common home equity theft loan products, including Home Equity Investment Loans.'
Home equity investments present the same core danger as SAMs. They provide upfront cash to homeowners in exchange for a share of future home price appreciation—meaning the actual amount owed depends on home price growth and triggers large, lump-sum obligations. Campbell has already challenged HEI provider Hometap on consumer protection grounds, yet the latest rulemaking does not specifically regulate HEI products. This inconsistency is indefensible.
The landscape is shifting nationwide. The Ninth Circuit overturned a district court judgment in Washington state, ruling that Unison's HEI product amounted to a reverse mortgage under state law. In August, Unlock settled with Minnesota's Attorney General over allegations that home equity agreements violated state usury caps, disclosure rules, and licensing requirements. Illinois passed a legal framework earlier this year that other states are watching. Campbell and the Massachusetts Legislature should seize this moment to extend comprehensive protections to HEI products before more homeowners are trapped.