Maine Passes Law to Regulate Home Equity Investment Contracts

On April 13, 2026, Maine enacted LD 1901, “An Act to Regulate Shared Appreciation Agreements Relating to Residential Property,” effective immediately. This law regulates “shared appreciation mortgage loans” (“SAM”), defined to include products commonly known as “home equity investments” (“HEI”), at the state level in Maine. The law imposes significant restrictions and requirements on HEI contracts in Maine. Unlike prior versions of the bill, which would have effectively eliminated any possibility of offering HEIs in Maine, the enacted law provides a path for origination in compliance with certain requirements. That said, this law arguably represents the most restrictive regulation of HEIs to date. Below, we provide a brief background on states with laws regulating HEIs and summarize certain of the amendments made to Maine’s Consumer Credit Code to regulate the origination and servicing of HEI contracts in Maine.

For background, HEIs are typically structured as real estate or forward sale option contracts, where providers make an upfront payment to homeowners in exchange for a future percentage interest in the property. To date, only a few state legislatures have enacted laws specifically regulating HEIs: Connecticut, Illinois, Maryland, and now, Maine. Legislation that would regulate HEIs has been introduced in several other states—namely, in Massachusetts, Pennsylvania, and Washington.

Prior to the enactment of LD 1901, on October 29, 2025, the Maine Department of Professional & Financial Regulation Bureau of Consumer Credit Protection (the “Bureau”) issued Advisory Ruling #122 regarding “shared appreciation” contracts. In this guidance, the Bureau interpreted HEIs as credit transactions under the Maine Consumer Credit Code (“MCCC”), and accordingly, opined that HEI providers must obtain a supervised lender license in order to offer HEIs in the state. The new law codifies and expands upon this guidance.

SAMs are defined in Maine 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. Accordingly, the definition of a SAM under the law includes HEIs. Under the new law, and consistent with the prior Bureau guidance, SAMs are credit transactions subject to the MCCC. As such, licensing requirements applicable to supervised lenders apply to SAM providers. Moreover, the law subjects SAMs to the state’s provisions for high-cost mortgage loans when SAMs meet certain rate/point and fee thresholds. Because SAMs are considered extensions of credit under the MCCC, SAMs are also subject to the general requirements on credit transactions, including a three-day right of rescission, finance charge limits, and foreclosure procedures and protections. The provision stating that SAMs are credit transactions subject to the MCCC (and that providers are required to be licensed as supervised lenders) applies retroactively to October 29, 2025, the date the Bureau published Advisory Ruling #122.

The Maine law otherwise imposes new restrictions and requirements on SAMs offered in Maine beginning on April 13, 2026. Some of the most notable restrictions under the law prohibit SAMs from including the following terms:

• Provisions that restrict a homeowner from renting the property securing the SAM;
• Provisions that restrict a homeowner from refinancing an existing lien;
• Use of a settlement payment formula that differs from the formula originally agreed upon by the parties to the SAM;
• Mandatory arbitration provisions;
• Confidentiality provisions regarding the terms of the loan;
• Provisions permitting unilateral term extensions by the SAM provider (subject to exceptions for 30-day and one-year unilateral extensions under certain circumstances);
• Prepayment fees or penalties; and
• Demand features to accelerate the payment date, unless for fraud, default on the loan, or an adverse impact to the creditor’s security.

In addition to prohibiting certain terms, the Maine law also imposes certain requirements on SAM contracts, the providers that offer SAMs, and servicers of SAMs. For example, the Maine law requires that any settlement payment amount under the terms of a SAM must be based only on the appraisal at the time of settlement, and cannot include additional charges based on the condition of the property. SAMs must contain certain disclosures, including the annualized cost, equity share payment amount, settlement payment amount, and annual percentage rate for each year of the term of the loan based on a real estate appreciation index prescribed by rule. Appraisals conducted to value property under SAMs must comply with appraisal valuation independence standards. In addition, SAM providers/servicers must comply with post-origination disclosure requirements, including requirements related to the provision of periodic statements and payoff statements and notification of actions that could impact the rights or interests of the homeowner.

The new Maine law imposes further requirements on SAM origination. For one, the homeowner must obtain a certificate of counseling from a third-party organization approved by HUD. This requirement is not unique—Illinois law similarly requires homeowners to receive independent counseling prior to entering into a shared appreciation agreement. One requirement unique to Maine, however, is that a homeowner must have independent counsel representing the homeowner in the SAM contract. If the homeowner does not have independent counsel, the SAM will be presumed unconscionable or the result of an unfair or deceptive trade act or practice and subject to rescission, among other relief.

Importantly for investors or purchasers of HEIs, the Maine law expressly provides that a person who purchases or is otherwise assigned a SAM is subject to all affirmative claims and defenses that a borrower may assert against a creditor of the loan. A violation of the SAM requirements constitutes a per se violation of Maine’s prohibition against unfair and deceptive acts or practices and the mortgage servicer duty of good faith. Violations of the prohibition against unfair and deceptive acts or practices can result in cease and desist orders, restitution, actual damages under a private right of action, and penalties of up to $10,000 per violation. Violations of the mortgage servicer duty of good faith can result in dismissal or stay of foreclosure, actual damages, and statutory damages up to $15,000 for a pattern or practice under a private right of action.

Currently, we are unaware of any HEI contracts that are offered in Maine. The specific restrictions and requirements under the newly enacted Maine law will require product updates and amendments before HEI originators enter the Maine market. Homeowners may also face difficulty finding qualified, HUD-approved counselors who are knowledgeable enough about HEIs to provide accurate counseling. Maine attorneys also will need to get up to speed on the product and Maine requirements to provide the representation required under the law. Regardless of the challenges, there will be more to come in Maine, as the newly enacted law requires the Bureau to publish rules implementing the law, including with respect to disclosures to be provided to homeowners.