"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."
"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."
"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."
"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."
Home equity investment arrangements allow homeowners to access equity without monthly payments, repaying upon sale, refinance, or death. Payoff amounts can exceed initial cash advances, impacting retirement and wealth transfer. Maine's new legislation, supported by key officials, introduces consumer protections including enhanced disclosures, mandatory counseling, and limits on contract terms. The law defines shared appreciation mortgage loans and ensures liability extends to assignees, aiming to protect homeowners from potential financial pitfalls associated with these complex financial products.
Read at www.housingwire.com
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