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Maine Leads the Nation:
New Law Takes Aim at Predatory Home Equity Investment Contracts

For years, home equity investment (HEI) companies have operated in a regulatory grey zone, marketing complex financial products to homeowners while largely avoiding the consumer protections that govern traditional mortgage lending. That changed this month in one state. Maine has become the first state in the country to pass a law specifically designed to regulate HEI contracts, a significant and long-overdue step in the right direction.

Signed by Governor Mills on April 13, 2026, LD 1901, An Act to Regulate Shared Appreciation Agreements Relating to Residential Property, brings HEI products firmly within the reach of Maine's consumer credit laws and establishes some of the strongest homeowner protections in the nation for this industry. We hope other states are paying close attention.

What Are Home Equity Investments — and Why Do They Need Regulating?

HEI companies pitch their products as an attractive alternative to traditional loans: give up a share of your home's future appreciation in exchange for a lump sum of cash today, with no monthly payments and no interest. For cash-strapped homeowners, particularly seniors, the pitch sounds almost too good to be true and it often is.

In reality, HEI contracts can require homeowners to repay many times the amount they originally received. That repayment comes due all at once, typically when the home is sold, a maturity date is reached, or the homeowner dies. The final repayment amount is virtually unknowable at signing, since it depends on how much the home appreciates. Most homeowners will have to sell to satisfy the payment and will walk away with far less equity than they expected. Along the way, they often face restrictions on renting the property, requirements that it remain their primary residence, and limits on additional financing.

HEI companies have long tried to sidestep mortgage and lending laws by characterizing their products as option contracts rather than loans. Courts are beginning to push back. Cases in the Ninth Circuit, Colorado, Massachusetts, and Arizona have exposed the deceptive nature of these products, and Singleton Schreiber has been at the forefront of that litigation, having filed class action lawsuits against Unison in Washington, D.C. and Colorado on behalf of homeowners trapped in these agreements.

What Maine's Law Does

Maine's legislation addresses HEI products head-on. The law formally classifies shared appreciation mortgage loans as consumer loans subject to the Maine Consumer Credit Code, closing the loophole that allowed HEI companies to operate outside normal lending regulations. It was enacted on an emergency basis and applies retroactively to October 29, 2025, meaning any non-compliant agreements entered into after that date are void and unenforceable.

The substantive consumer protections are robust:

• Mandatory independent counseling. Before closing, borrowers must receive counseling from a HUD-approved or state-approved housing counselor covering the product's true costs, alternatives, and post-closing obligations.
• A presumption of unconscionability. Perhaps the most powerful provision: if a borrower lacked independent legal counsel during origination and execution, the loan is presumed to be unconscionable or the result of an unfair or deceptive trade practice. Lenders bear the burden of rebuttal. If they fail, courts may rescind the mortgage and award attorney's fees against the lender.
• Prohibition on mandatory arbitration. Lenders cannot bury forced arbitration clauses in their contracts, a tactic long used to block consumers from pursuing class action claims.
• No penalties for early payoff. Homeowners who want to terminate the loan before maturity cannot be charged prepayment penalties.
• Restrictions on rental and refinancing prohibitions. Lenders cannot ban renting out the property outright or block a rate-and-term refinance of a senior lien. Lenders must subordinate their interest in connection with such refinancings.
• Required disclosures. Lenders must disclose the annualized cost of the loan, the equity share payment amount, and the settlement payment amount before signing.
• Assignee liability. Anyone who purchases or is assigned the loan is subject to the same claims and defenses the borrower could assert against the original lender, preventing lenders from offloading liability to third parties.
• Additional protections include a three-day right of rescission, property valuation independence standards, prohibition on demand features outside of fraud or default, and a requirement that lenders provide a detailed payoff statement within seven business days of a borrower's request.

Why This Matters Beyond Maine

HEI companies have expanded aggressively in recent years, targeting homeowners who are equity-rich but cash-constrained, including many older Americans who may not fully understand what they are signing. The marketing is sophisticated, the contracts are complex, and the consequences can be devastating.

Litigation has been an important check on the industry's worst practices. But litigation is reactive. Legislation like Maine's LD 1901 is proactive, setting clear rules before more homeowners are harmed. We hope other states follow Maine's lead.

For homeowners in Maine, this law is a meaningful step toward leveling the playing field. For homeowners everywhere else, the fight continues and Singleton Schreiber will be part of it. If you believe you have been harmed by a home equity investment agreement, contact us today.