The Attorney General’s Office in Massachusetts has adopted updated guidelines for shared appreciation mortgages (SAMs), introducing stricter disclosure obligations and consumer safeguards for this specialized form of home equity financing. Taking effect on November 6, the new measures define the conditions under which nonprofit SAM lenders may avoid liability under state consumer protection statutes while mandating enhanced notice requirements, including clear disclosure of the highest possible repayment amount borrowers could face. This regulatory shift follows a provision in Massachusetts’ economic development legislation, enacted in November 2024, which granted broad immunity from consumer claims to qualifying nonprofit SAM programs, including those originated by BlueHub Capital.
How Shared Appreciation Mortgages Work
Under the BlueHub-style arrangement, borrowers obtain a traditional fixed-rate first mortgage combined with a secondary lien that captures a percentage of future home value appreciation. The SAM second lien requires the homeowner to share a portion of any increase in property value with the lender upon sale, transfer or refinance. Because the payoff amount is variable and not set in dollars at origination, borrowers can face unexpectedly large balloon payments when they attempt to exit the loan.
The National Consumer Law Center (NCLC) has emphasized these risks through the Humes v. BlueHub Capital Inc. class-action lawsuit, which alleges that SAMs incorporate concealed costs comparable to subprime lending, eroding home equity and increasing the likelihood of foreclosure. The court found BlueHub liable for violating multiple state lending laws and recently certified the class to move forward, according to NCLC.
Reaction from Consumer Advocates
“While presented as a lifeline, shared appreciation mortgages often become a trap,” stated Andrea Bopp Stark, a senior attorney at the National Consumer Law Center, in a prepared statement. “The Attorney General’s final rule helps shield consumers from BlueHub’s lending practices and similar schemes, yet Massachusetts should expand protections to address more widespread predatory home equity products, such as Home Equity Investment Loans (HEIs).”
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The new regulations do not ban SAMs but require lenders—particularly nonprofit entities—to operate with full transparency and comply with consumer protection standards. The rule outlines specific conditions under which SAM providers may qualify for legal exemptions while enforcing mandatory disclosure protocols, including explicit presentation of the maximum repayment liability.
Push for Expanded Oversight
While acknowledging the rule’s progress, the NCLC argues it falls short of addressing home equity investments (HEIs), a rapidly expanding product category. These agreements provide immediate cash to homeowners in exchange for a stake in future property value gains. Because repayment depends entirely on market appreciation, borrowers face unpredictable lump-sum demands upon sale or refinancing, posing significant financial risks.
Massachusetts Attorney General Andrea Joy Campbell has already taken legal action against one HEI provider, Hometap, accusing the company of violating consumer protection laws. However, the NCLC points out that the latest regulatory changes do not explicitly cover HEI products.
Other jurisdictions have seen legal challenges against HEI providers. Last year, the Ninth Circuit Court of Appeals reversed a 2023 Washington state district court ruling, determining that Unison’s HEI structure qualified as a reverse mortgage under state law. Earlier this year, Unlock, another HEI company, settled with the Minnesota Attorney General’s Office over claims that its equity agreements functioned as unregulated mortgage loans, violating usury limits, disclosure laws, and licensing requirements.
