Senator moves to regulate home equity investments at the federal level

A bill introduced in the U.S. Senate would amend the Truth in Lending Act (TILA) to explicitly include home equity investments (HEIs) within the law’s definition of residential mortgage loans — a move that would subject the growing financial product to federal consumer lending protections. Introduced by Sen. Jeff Merkley (D-Ore.), the Home Equity Lending Integrity Act would amend Section 103 of TILA to define a home equity investment and clarify that these transactions fall under the law’s mortgage framework. The measure was referred to the Senate Committee on Banking, Housing, and Urban Affairs. If enacted, legislation would require HEIs to comply with the same federal disclosure and consumer protection requirements that apply to many traditional residential mortgages. It also directs the Consumer Financial Protection Bureau (CFPB) to issue regulations that govern enforcement and civil liability for violations that involve HEIs. The bill includes a “sense of Congress” provision stating that lawmakers view the amendment as a clarification of existing law rather than a substantive change to how TILA should be administered. Under an HEI, a homeowner receives upfront cash in exchange ...