Maine Gov. Janet Mills this week signed LD 1901, making Maine the first state to enact comprehensive consumer protections for home equity investments (HEIs), which the new law defines as “shared appreciation mortgage loans.”

The bill, titled “An Act to Regulate Shared Appreciation Agreements Relating to Residential Property,” establishes guardrails around a growing class of home equity-based products that offer cash upfront in exchange for a share of a home’s future value. The law targets features that advocacy groups like the National Consumer Law Center (NCLC) say can lead to large, unpredictable lump-sum payments and forced home sales.

HEI arrangements generally allow homeowners to tap equity with no monthly payments, repaying the provider when the home is sold or refinanced, or when the borrower dies. The payoff amount is tied to the home’s future value, meaning it is unknown when the agreement is signed. According to an NCLC press release, the balloon payments can reach tens or even hundreds of thousands of dollars above the initial cash advance, stripping equity needed for retirement, health care or intergenerational wealth transfers.

“With the signing of this groundbreaking bill, Governor Janet Mills brings transparency and fairness to the home equity investment loan process,” Andrea Bopp Stark, senior attorney at NCLC, said in a statement. “This legislation applies comprehensive boundaries to a complex financial product that is often marketed and sold without regard for the long-term impacts on homeowners.”

The bill was sponsored by Rep. Art Bell (D-Yarmouth.) The Maine Bureau of Consumer Credit Protection, led by Superintendent Linda Conti and principal examiner Ed Myslik, supported the legislation and was actively involved in its development, according to NCLC.

Key provisions of Maine’s HEI law

LD 1901 defines “shared appreciation mortgage loans” as transactions in which a homeowner receives cash upfront in exchange for a future interest in the property’s value, secured by the real estate and payable upon a triggering event such as sale, refinance or death.

The statute’s consumer protections include:

• Enhanced disclosures that spell out the actual costs and potential future payments associated with the loan
• Mandatory housing counseling education and legal representation for consumers before they enter into a shared appreciation mortgage
• Limits on contract terms, including prohibitions on unreasonable restrictions related to renting, occupying or maintaining the property
• Assignee liability, extending homeowners’ claims and defenses against the original lender to any purchaser or assignee of the loan

Consumer advocates say HEI products are often marketed nationally to older homeowners with significant equity and to consumers with lower credit scores. The structures are typically positioned as alternatives to home equity lines of credit, cash-out refinances or reverse mortgages — but without the same level of regulatory oversight.

What’s happening in other states?

“HEI loans may be marketed as a lifeline to a homeowner in trouble, but they are a trap that siphons away people’s hard-earned equity,” Tom Cox, a Maine attorney, said in NCLC’s announcement. “Thanks to the Maine Legislature and Governor Mills, Mainers will have one less bad financial actor to contend with.”

For lenders, servicers and real estate agents, Maine’s law is an early signal of how states may move to regulate nontraditional equity products that sit outside conventional forward mortgage and reverse mortgage frameworks but function similarly from the homeowner’s perspective.

A key legal decision involving the HEI space was announced in October when a federal appeals court ruled that Unison‘s flagship product met the definitions of a reverse mortgage under Washington state law.

It’s not the only legal battle being waged against San Francisco-based Unison, which faces a class-action suit in California stemming from a complaint by a senior homeowner. The complaint is based on a $97,000 payout in 2017 that allegedly grew to $375,000 after eight years, implying an effective interest rate of nearly 35%.

The company was also recently sued in Colorado. The plaintiffs in that case say they are “trapped” in an agreement that would force them to pay up to $278,000 to terminate the contract after an upfront payout of about $87,000.

Another major HEI company, Hometap, was targeted by the Massachusetts attorney general beginning in February 2025. Late last year, a Suffolk Court Superior Court judge ruled that Hometap’s defense could not rely on arguments that state regulators previously approved or implicitly sanctioned the company’s business model. The case is still in the discovery phase, with a deadline of Oct. 23, 2026, for the parties to submit evidence.

Changes on the horizon?

HEI providers and investors now face state-level requirements in Maine around disclosures, counseling and assignee liability that more closely resemble traditional mortgage rules. That could affect product design, pricing, secondary market appetite and how these agreements are integrated into broader home financing strategies.

Maine’s law also underscores growing regulatory and advocacy attention on equity-stripping risks for older homeowners and equity-rich, cash-poor households. Housing professionals operating in Maine will need to understand the new definitions and compliance obligations when discussing or encountering shared appreciation structures in transactions, refinances or loss-mitigation scenarios.

Stakeholders in other states are urged to watch Maine’s framework as a potential model for future legislation. NCLC said its attorneys have long pressed for stronger oversight of HEI products. The organization provided technical assistance in drafting LD 1901 and testified in support of the bill.

In November, not long after the ruling against Unison in Washington state, Allen Price of BSI Financial Services told HousingWire that secondary market investors are watching these legal proceedings with interest as they could reshape how HEI products are marketed and securitized.

“It’s kind of early to tell with any kind of specificity what the real impact is going to be to [sales] volumes,” Price said. “The disclosures that homeowners are going to get will probably change. In Washington state, if you’re a shared equity originator, you’re going to have to change your disclosures — which may not necessarily mean a whole lot, but that’s more cost. You’ve got more training, more consumer education you have to do.”