Massachusetts AG issues rule on shared appreciation mortgages, NCLC calls for broader protections

The Massachusetts Attorney General’s Office has implemented a new rule governing shared appreciation mortgages, adding disclosure and consumer protection requirements for a niche home equity product that has faced recent scrutiny. The rule, effective Nov. 6, clarifies when nonprofit shared appreciation mortgage (SAM) lenders are shielded from state consumer protection claims and sets new notice standards, including prominent disclosure of the maximum amount borrowers may have to repay, according to an announcement from the National Consumer Law Center (NCLC). The regulation stems from a provision in the state’s economic development bill, passed in November 2024. That statute carved out a broad waiver of liability under Massachusetts consumer protection laws for certain nonprofit SAMs, including loans originated by BlueHub Capital. Advocates say the legislative change created a “dangerous loophole” that exposed distressed homeowners to complex and costly loan structures with limited recourse. Under the BlueHub-style model, borrowers typically receive a fixed-rate first mortgage alongside a second lien tied to future home price appreciation. The SAM second lien requires the homeowner...