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Massachusetts House Bill H1106

Massachusetts 2025-2026 Regular Session

Massachusetts House Bill H1106 Compare Versions

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22 HOUSE DOCKET, NO. 2692 FILED ON: 1/16/2025
33 HOUSE . . . . . . . . . . . . . . . No. 1106
44 The Commonwealth of Massachusetts
55 _________________
66 PRESENTED BY:
77 Daniel Cahill
88 _________________
99 To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
1010 Court assembled:
1111 The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
1212 An Act relative to home investments.
1313 _______________
1414 PETITION OF:
1515 NAME:DISTRICT/ADDRESS :DATE ADDED:Daniel Cahill10th Essex1/16/2025 1 of 23
1616 HOUSE DOCKET, NO. 2692 FILED ON: 1/16/2025
1717 HOUSE . . . . . . . . . . . . . . . No. 1106
1818 By Representative Cahill of Lynn, a petition (accompanied by bill, House, No. 1106) of Daniel
1919 Cahill relative to home investments. Financial Services.
2020 The Commonwealth of Massachusetts
2121 _______________
2222 In the One Hundred and Ninety-Fourth General Court
2323 (2025-2026)
2424 _______________
2525 An Act relative to home investments.
2626 Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
2727 of the same, as follows:
2828 1 SECTION 1: The General Laws are hereby amended by inserting after chapter 255F the
2929 2following new chapter:-
3030 3 Chapter 255G: Shared Equity Investments
3131 4 Section 1: Definitions
3232 5 Section 1. As used in this chapter the following words shall, unless the context otherwise
3333 6requires, have the following meanings:-
3434 7 "Agreed home value" means the value of the residential property at the time of
3535 8origination, as agreed to by both the homeowner and the shared equity investor and does not
3636 9include any discount or risk adjustment. 2 of 23
3737 10 "Annualized cost" means the annualized cost of a shared equity investment, expressed as
3838 11a percentage and calculated as follows: (((settlement payment / investment amount)^(365 / term
3939 12days))-1).
4040 13 “Beginning home equity" means the unencumbered equity in a homeowner's residential
4141 14property after the shared equity investment is consummated, expressed as a percentage and
4242 15calculated as follows: (1-((senior secured debt + investment amount)/ agreed home value)).
4343 16 “Commissioner” means the Massachusetts commissioner of banks.
4444 17 “Control Person” means each member, director, principal officer, and office manager,
4545 18controlling shareholder owning, directly or indirectly, at least twenty-five (25%) of a legal entity,
4646 19and any other person with the authority to direct the management of the legal entity.
4747 20 “Instrumentality created by the United States or any state” means a federal, state,
4848 21municipal government, quasi-governmental entity or a nonprofit agency or corporation
4949 22incorporated under the laws of the commonwealth that has a tax exempt status granted under the
5050 23provisions of section 501(c)(3) of the federal Internal Revenue Code, which exclusively makes
5151 24home equity investments on residential property to be financed with public funds, or negotiates,
5252 25places, assists in the placement of, finds, or offers to negotiate, place, assist in the placement of
5353 26or find home equity investments on residential property to be financed with public funds only
5454 27under a contract with a federal, state, or municipal government, any instrumentality thereof or
5555 28any quasi-governmental entity as determined by the Commissioner. The making of a home
5656 29equity investment shall include being named as the investor on the investment agreement or
5757 30other investment documents. 3 of 23
5858 31 “Homeowner” means the owner of the property that applies for or enters into a shared
5959 32equity investment.
6060 33 "Investment amount" means the gross proceeds of a shared equity investment that is
6161 34provided to the homeowner, before any deduction of third-party fees or amounts charged by the
6262 35shared equity investor.
6363 36 “Multi-state licensing system” means a system involving 1 or more states, the District of
6464 37Columbia, or the Commonwealth of Puerto Rico for the sharing of regulatory information and
6565 38the licensing and application processes, by electronic or other means, for home equity investors.
6666 39 “Residential property” means real property located in the commonwealth containing a
6767 40dwelling house with accommodations for four or less separate households and occupied in whole
6868 41or in part by either the homeowner who obtained the shared equity investment, or a renter who
6969 42pays rent directly to the homeowner.
7070 43 "Senior secured debt" means any obligation secured by a lien on the residential property
7171 44that would be senior to the lien securing obligations under the shared equity investment after
7272 45application of any proceeds from the shared equity investment at closing to reduce the amount of
7373 46any such senior obligations.
7474 47 "Settle" or "settlement" means the process by which a homeowner terminates a shared
7575 48equity investment, as set out in the terms of the shared equity investment.
7676 49 "Settlement payment" means the dollar amount that the homeowner will pay to settle a
7777 50shared equity investment, excluding any amounts paid by the homeowner pursuant to the terms
7878 51of the shared equity investment as (i) reimbursement for payments made on behalf of the 4 of 23
7979 52homeowner, (ii) administrative fees charged to the homeowner during the term of the shared
8080 53equity investment, or (iii) interest required that is not otherwise prohibited by law.
8181 54 “Shared equity investment” means a non-recourse transaction whereby a shared equity
8282 55investor grants an outright sum of money to a homeowner in exchange for an equity interest in
8383 56the homeowner’s residential property or a future obligation to pay a sum upon the occurrence of
8484 57one or more conditions subsequent. A shared equity investment is not a mortgage loan or other
8585 58form of loan as defined in section 3 of chapter 167E.
8686 59 “Shared equity investor” means any person or legal entity engaged in the business of
8787 60making or servicing shared equity investments. The term shall not include: (i) a shared equity
8888 61investment holder; or (ii) a person or entity that purchases or invests solely in an interest in real
8989 62estate other than a shared equity investment.
9090 63 "Shared equity investment application" means the submission of a homeowner's financial
9191 64and property information for purposes of entering a shared equity investment.
9292 65 "Shared equity investment holder" means a person or entity that purchases and passively
9393 66holds a pre-existing shared equity investment, or interest therein, which is serviced by a third-
9494 67party shared equity investor who is licensed under this chapter.
9595 68 "Term days" means the exact number of days that passed between the date on which the
9696 69investment amount is disbursed to the homeowner and the settlement date of the shared equity
9797 70investment.
9898 71 Section 2: Shared equity investor license requirement; exempted entities 5 of 23
9999 72 (a) License Required. No person shall act as a shared equity investor with respect to
100100 73residential property unless first obtaining a license from the Commissioner.
101101 74 (b) Exemptions. The following persons shall be exempt from the requirements of this
102102 75chapter:
103103 76 (i) any person who is employed by or associated with a licensed shared equity investor
104104 77and acting under the direction of said licensed shared equity investor shall not be required to
105105 78obtain such license.
106106 79 (ii) any shared equity investor making twelve or fewer shared equity investments within
107107 80any period of twelve consecutive months; provided, however, that in computing the number of
108108 81shared equity investments, there shall be counted in the shared equity investments of more than
109109 82one partnership, association, trust or corporation, the majority interest of which are owned or
110110 83controlled directly or indirectly by the same person or persons, partnerships, associations, trusts
111111 84or corporations and including in the loans of a partnership or company not incorporated the loans
112112 85of the several members thereof.
113113 86 (iii) a bank as defined in section one of chapter one hundred and sixty-seven, a national
114114 87banking association, a federally chartered credit union, a federal savings and loan association, a
115115 88federal savings bank, or any subsidiary or affiliate of the above, insurance company, or to any
116116 89bank, trust company, savings bank, savings and loan association, credit union or insurance
117117 90company organized under the laws of any other state; provided, however, that except as provided
118118 91herein, such provisions shall apply to any subsidiary or affiliate, as defined by the
119119 92Commissioner, of any such exempted entity and of a bank holding company established in
120120 93accordance with state or federal law; 6 of 23
121121 94 (iv) any instrumentality created by the United States or any state or to any nonprofit,
122122 95public or independent post-secondary educational institution within the commonwealth
123123 96authorized by law to grant degrees by the commonwealth, or by any agency or instrumentality
124124 97thereof, for shared equity investments made by any such educational institution to its faculty or
125125 98staff, or to any charitable organization originally created by a last will and testament before
126126 99January first, nineteen hundred and fifty which makes no more than twelve shared equity
127127 100investments during a twelve month period;
128128 101 (v) a real estate broker or real estate salesman as defined in section eighty-seven PP of
129129 102chapter one hundred and twelve who, in connection with services performed in a prospective real
130130 103estate transaction, provides shared equity investment information or assistance to a buyer if such
131131 104real estate broker or real estate salesman is not compensated for the same in addition to the
132132 105compensation received from the seller for such real estate services.
133133 106 Section 3: License application; multi-state licensing system
134134 107 The application for a license shall be in a form prescribed by the Commissioner. Such
135135 108application shall include the name and addresses where the business of the applicant is located,
136136 109and if the applicant is a legal entity, the names and addresses of each Control Person. The
137137 110Commissioner may require a background investigation of each applicant for a shared equity
138138 111investment license, and each Control Person of an applicant, by means of fingerprint checks by
139139 112the department of criminal justice information services pursuant to section 172 of chapter 6, and
140140 113the Federal Bureau of Investigation for state and national criminal history record checks. Receipt
141141 114of criminal history record information by a private entity shall be prohibited. Each application 7 of 23
142142 115for a license shall be accompanied by an investigation fee. Investigation and license fees shall be
143143 116determined annually by the Commissioner of administration under section 3B of chapter 7.
144144 117 The Commissioner may participate in a multi-state licensing system for shared equity
145145 118investors. The Commissioner may establish requirements for participation by an applicant in a
146146 119multi-state licensing system which may vary from the provisions set out in sections 3 and 5. The
147147 120applicant shall pay directly to such multi-state licensing system any additional fee relating to
148148 121participation in such multi-state licensing system. The Commissioner shall ensure that the multi-
149149 122state licensing system adopts appropriate privacy, data security and security breach notification
150150 123policies. Upon written request, the Commissioner shall make available within 30 days, a copy of
151151 124the contract between the division and the multi-state licensing system that satisfies this section.
152152 125 Section 4: Issuance of license by Commissioner; notice of license denial; appeal
153153 126 Upon the filing of an application for a license, if the Commissioner finds that the
154154 127financial responsibility, character, reputation, integrity and general fitness of the applicant, and
155155 128of the partners or members thereof if the applicant is a partnership or association, and of the
156156 129officers, directors and principal employees if the applicant is a corporation, are such as to
157157 130warrant belief that the business will be operated honestly, fairly, soundly and efficiently in the
158158 131public interest consistent with the purposes of this chapter, he shall thereupon issue the applicant
159159 132a license to engage in the business of a shared equity investor. If the Commissioner shall not so
160160 133find, he shall not issue a license and he shall notify the applicant of the denial. Within twenty
161161 134days thereafter, he shall enter upon his records a written decision and findings containing the
162162 135reasons supporting the denial and shall forthwith give written notice thereof by registered mail to
163163 136the applicant. Within thirty days after the date of such notice, the applicant may appeal from such 8 of 23
164164 137denial to the superior court for Suffolk county, sitting in equity. The court shall hear all pertinent
165165 138evidence and determine the facts and upon the facts as so determined, review said denial and, as
166166 139justice and equity may require, affirm the same or order the Commissioner to issue such license.
167167 140The Commissioner shall approve or deny every application for a license within ninety days after
168168 141the filing thereof, but any failure of the Commissioner to act within such period shall not be
169169 142deemed to be an approval of any such application.
170170 143 Section 5: Information on license; changes; notice requirements
171171 144 Each license shall state the address at which the business is to be conducted and shall
172172 145state the name of the licensee. Business shall at all times be conducted in the name of the
173173 146licensee as it appears on the license. A copy of such license or license number shall be posted on
174174 147the licensee’s website.
175175 148 Such license shall not be transferable or assignable and shall expire annually on a date
176176 149determined by the Commissioner.
177177 150 Any change of location or closing of a place of business of the licensee, either at the
178178 151address stated on the license or at a place other than said address stated on the license, shall
179179 152require prior written notice thereof to the Commissioner. Such notice shall be in writing setting
180180 153forth the reason therefor and shall be filed with the Commissioner at least thirty days prior to any
181181 154such relocation or closing.
182182 155 If there shall be any change among the Control Persons of any licensee, the licensee shall
183183 156notify the Commissioner in a timely manner of the name, address and occupation of each new
184184 157member, officer, partner or director, and provide such other information as the Commissioner
185185 158may require. 9 of 23
186186 159 Section 6: License suspension or revocation; notice and hearing
187187 160 The Commissioner may suspend or revoke any license issued pursuant to this chapter if
188188 161said Commissioner finds that:
189189 162 (i) the licensee has violated any provision of this chapter or any rule or regulation
190190 163adopted hereunder, or any other law applicable to the conduct of its business; or
191191 164 (ii) any fact or condition exists which, if it had existed at the time of the original
192192 165application for such license, would have warranted the Commissioner in refusing to issue such
193193 166license.
194194 167 Except as provided in section seven, no license shall be revoked or suspended except
195195 168after notice and a hearing thereon pursuant to chapter thirty A.
196196 169 A licensee may surrender a license by delivering to the Commissioner written notice that
197197 170it thereby surrenders such license, but such surrender shall not affect the civil or criminal liability
198198 171of the licensee for acts committed before such surrender.
199199 172 No revocation, suspension or surrender of any license shall impair or affect the obligation
200200 173of any pre-existing lawful contract between the licensee and any person.
201201 174 Section 7: Commissioner’s order to cease and desist from unlawful act or practice; prior
202202 175notice and opportunity for hearing; temporary order
203203 176 (a) If the Commissioner determines, after giving notice of and opportunity for a hearing,
204204 177that a licensee has engaged in or is about to engage in an act or practice constituting a violation
205205 178of a provision of this chapter or a rule, regulation or order hereunder, he may order such licensee 10 of 23
206206 179to cease and desist from such unlawful act or practice and take such affirmative action as in his
207207 180judgment will effect the purposes of this chapter.
208208 181 (b) If the Commissioner makes written findings of fact that the public interest will be
209209 182irreparably harmed by delay in issuing an order under subsection (a) he may issue a temporary
210210 183cease and desist order. Upon the entry of a temporary cease and desist order, the Commissioner
211211 184shall promptly notify, in writing, the licensee affected thereby that such order has been so
212212 185entered, the reasons therefor, and that within twenty days after the receipt of a written request
213213 186from such licensee, the matter will be scheduled for hearing to determine whether or not such
214214 187temporary order shall become permanent and final. If no such hearing is requested and none is
215215 188ordered by the Commissioner, the order shall remain in effect until it is modified or vacated by
216216 189the Commissioner. If a hearing is requested or ordered, the Commissioner, after giving notice of
217217 190and opportunity for a hearing to the licensee subject to said order, shall, by written finding of
218218 191facts and conclusions of law, vacate, modify or make permanent the order.
219219 192 (c) No order under this section, except an order issued pursuant to subsection (b), may be
220220 193entered without prior notice of and opportunity for a hearing. The Commissioner may vacate or
221221 194modify an order under this section upon finding that the conditions which required such an order
222222 195have changed and that it is in the public interest to so vacate or modify.
223223 196 Any order issued pursuant to this section shall be subject to review as provided in chapter
224224 197thirty A.
225225 198 Section 8: Annual report; examination of business records
226226 199 (a) Annual Report. Each licensee shall annually, on or before a date determined by the
227227 200Commissioner, file a report with the Commissioner containing such information as said 11 of 23
228228 201Commissioner may require concerning the business and operations conducted by the licensee in
229229 202the commonwealth during the preceding calendar year.
230230 203 (b) Recordkeeping. A licensee shall keep and use such business records in such form and
231231 204at such location as said Commissioner shall, by regulation, determine, which shall enable said
232232 205Commissioner to determine whether such licensee is complying with the provisions of this
233233 206chapter and any rules or regulations promulgated hereunder by said Commissioner and any other
234234 207law, rule or regulation applicable to the conduct of the business for which it is licensed under this
235235 208chapter. Nothing in this section shall be construed to permit any such licensee to destroy original
236236 209records or documents. Each such licensee shall preserve all such business records for a minimum
237237 210of three (3) years, or such longer period as the Commissioner may prescribe by regulation.
238238 211Notwithstanding the provisions of any general or special law or the Massachusetts Rules of Civil
239239 212Procedure to the contrary, service of a subpoena for business records upon a licensee, delivered
240240 213to an office of such licensee located within the commonwealth shall be deemed to have been
241241 214served at the location, whether within or outside the commonwealth, where the original business
242242 215records or documents are kept or maintained.
243243 216 (c) Examinations. The Commissioner shall inspect a licensee’s relevant records and
244244 217evidence of compliance with the provisions of this chapter or any rule or regulation issued
245245 218hereunder and with any other law, rule or regulation applicable to the conduct of the business for
246246 219which it is licensed under this chapter. For the purposes of such inspection, the Commissioner or
247247 220a representative of the Commissioner shall have access to the offices and place of business,
248248 221books, accounts, papers, records and files of all such licensees. The Commissioner, and any
249249 222person designated by him, may require the attendance and testimony of any person whom the
250250 223Commissioner deems necessary relative to the conduct and operation of such business. The total 12 of 23
251251 224cost for any such inspection, which shall be paid by the licensee within 30 days after the receipt
252252 225of an invoice therefore, shall be in accordance with fees determined annually by the
253253 226Commissioner of administration pursuant to section 3B of chapter 7, including expenses for
254254 227necessary travel outside the commonwealth for the purposes of conducting such inspections.
255255 228 During the course of such inspection, a shared equity investor that has entered into 50 or
256256 229more shared equity investments in the last calendar year shall be examined for its compliance
257257 230with applicable anti-discrimination laws and laws prohibiting unfair, deceptive, or abusive acts
258258 231or practices in consumer financial products or services. Such examination shall also include an
259259 232evaluation of such shared equity investor’s: (a) origination of shared equity investments and
260260 233consistency with safe and sound business practices; (b) efforts working with homeowners to
261261 234resolve performance defaults; and (c) disclosure and education of homeowners about the terms
262262 235of shared equity investment products. The Commissioner may make rules prescribing additional
263263 236factors for measuring a licensee’s performance.
264264 237 Upon the completion of such examination, the Commissioner shall prepare a written
265265 238evaluation of such shared equity investor’s record of performance, which shall be open to public
266266 239inspection upon request, and said written evaluation shall include: (a) the assessment factors
267267 240utilized to determine the shared equity investor’s descriptive rating; (b) the Commissioner’s
268268 241conclusions with respect to each such assessment factor; (c) a discussion of the facts supporting
269269 242such conclusions; and (d) the shared equity investor’s descriptive rating and the basis therefor.
270270 243 Based upon such examination, the shared equity investor shall be assigned 1 of the
271271 244following descriptive ratings: (a) outstanding record of performance; (b) high satisfactory record 13 of 23
272272 245of performance; (c) satisfactory record of performance; (d) needs to improve record of
273273 246performance; or (e) substantial noncompliance.
274274 247 In considering an application from a licensed shared equity investor for a renewal of a
275275 248license issued pursuant to this chapter, the Commissioner shall consider, but not be limited to,
276276 249the record of performance of any such shared equity investor in accordance with this section.
277277 250Said record of performance may provide the basis for the denial of any such renewal application.
278278 251 The Commissioner shall adopt regulations implementing the requirements of this section.
279279 252 The Commissioner shall preserve a full record of each such examination of a licensee,
280280 253including a statement of its condition. All records of investigation and reports of examination by
281281 254the commissioner, including work papers, information derived from such reports or in response
282282 255to such reports, and any copies thereof in the possession of any licensee under the supervision of
283283 256the commissioner, shall be confidential and privileged communications, shall not be subject to
284284 257subpoena and shall not be a public record under clause Twenty-sixth of section 7 of chapter 4.
285285 258For the purpose of this paragraph, records of investigation and reports of examinations shall
286286 259include records of investigation and reports of examinations conducted by any financial
287287 260institution regulatory agency of the federal government and any other state, and of any foreign
288288 261government which are considered confidential by such agency or foreign government and which
289289 262are in possession of the Commissioner. In any proceeding before a court, the court may issue a
290290 263protective order to seal the record protecting the confidentiality of any such record, other than
291291 264any such record on file with the court or filed in connection with the court proceeding, and the
292292 265court may exclude the public from any portion of a proceeding at which any such record may be
293293 266disclosed. Copies of such reports of examination shall be furnished to a licensee for its use only 14 of 23
294294 267and shall not be exhibited to any other person, organization or agency without prior written
295295 268approval by the Commissioner. The Commissioner may, in his discretion, furnish to regulatory
296296 269agencies of the federal government, of other states, or of foreign countries and any law
297297 270enforcement agency, such information, reports, inspections and statements relating to the
298298 271licensees under his supervision.
299299 272 Section 9: Shared equity investor obligations
300300 273 (a) Recission period. A shared equity investor shall provide at least three business days in
301301 274which the homeowner may rescind their acceptance of the shared equity investment before such
302302 275shared equity investment becomes effective and binding for the homeowner. The homeowner
303303 276shall submit the rescission notice in writing to the shared equity investor within such designated
304304 277rescission period.
305305 278 (b) Except in connection with a home purchase transaction, the homeowner's beginning
306306 279home equity must be equal to or greater than 10 percent. For purposes of this provision, if any
307307 280portion of the investment amount will be used to pay down existing obligations secured by the
308308 281residential property, the homeowner’s beginning home equity will be calculated after application
309309 282of the investment amount to pay down such obligations.
310310 283 (c) All appraisals or other valuation reports used to determine the agreed home value
311311 284must meet industry standards and be conducted by an independent third party, unless an
312312 285affiliated appraisal or valuation is disclosed and consented to in writing by the homeowner.
313313 286Copies of all valuation reports must be provided to the homeowner.
314314 287 (d) The annualized cost of a shared equity investment may not exceed 20 percent. 15 of 23
315315 288 Section 10: Disclosure requirements
316316 289 (a) Prior to entering into a shared equity investment, a shared equity investor shall
317317 290provide a disclosure to the homeowner in a form prescribed by the Commissioner. The
318318 291disclosure shall contain at least the following information:
319319 292 (i) A clear and conspicuous statement that (1) by entering into the shared equity
320320 293investment, a lien will be placed on the property and that failure to comply with the terms of the
321321 294shared equity investment or an inability to settle the shared equity investment may result in the
322322 295homeowner losing their property, and (2) that the homeowner should obtain the advice of an
323323 296attorney before proceeding with the transaction.
324324 297 (ii) A summary of the terms of the shared equity investment including:
325325 298 (1) The investment amount;
326326 299 (2) An itemization of any charges and payments to third parties and any fees paid to the
327327 300shared equity investor which are deducted from the investment amount;
328328 301 (3) The net proceeds to be delivered to the homeowner after the expiration of the
329329 302recission period;
330330 303 (4) The maximum term of the shared equity investment;
331331 304 (5) How the homeowner can settle the shared equity investment together with an
332332 305explanation of how the settlement payment will be calculated; and
333333 306 (6) A summary of the types of fees that may be charged in connection with settling the
334334 307shared equity investment. 16 of 23
335335 308 (iii)(1) The agreed home value without adjustment and the method used to determine the
336336 309agreed home value; and (2) if the agreed home value is adjusted for any discounts, risk
337337 310adjustments, or enhancements for purposes of the shared equity investment, the amount of such
338338 311adjustments and the value of the property used for purposes of calculating the shared equity
339339 312investor’s equity interest in the property;
340340 313 (iv) The method of determining the final value of the property that is the subject of the
341341 314shared equity investment upon settlement of the shared equity investment;
342342 315 (v) The maximum equity interest in the property that the shared equity investor may
343343 316receive under the terms of the shared equity investment or an explanation of any other limits on
344344 317the amount that the shared equity investor may receive under the shared equity investment;
345345 318 (vi) Any other amounts charged in connection with the shared equity investment;
346346 319 (vii) Settlement examples for the shared equity investment after three years, five years,
347347 32010 years, 15 years, and 30 years, in each case up to the maximum term of the applicable shared
348348 321equity investment.
349349 322 (1) For each settlement time frame, examples shall be provided based on:
350350 323 (A) No change in the value of the property;
351351 324 (B) A total depreciation of 10 percent;
352352 325 (C) Annual appreciation of three and one half percent;
353353 326 (D) Annual appreciation of five and one half percent; and 17 of 23
354354 327 (E) The actual annualized change in value of residential real property in Massachusetts
355355 328over the prior five year period, measured from the most recent available data point in the All-
356356 329Transactions House Price Index as published by the Federal Reserve Bank of St. Louis.
357357 330 (2) For each combination of settlement time frame and property change in value specified
358358 331in subsection (vii)(1) of this section, the homeowner shall be provided with:
359359 332 (A) The projected final value of the property;
360360 333 (B) The equity interest that the shared equity investor would be entitled to receive,
361361 334expressed as a percentage of projected final property value;
362362 335 (C) The dollar value of such equity interest, and if any cap applies, the capped dollar
363363 336value required to settle the shared equity investment; and
364364 337 (D) An annual percentage rate equivalent based on the investment amount, the gross
365365 338estimated settlement cost, and the number of days from the disbursement of the investment
366366 339amount to settlement.
367367 340 (b) Shared equity investors may provide homeowners with additional disclosures
368368 341provided that the form disclosure prescribed by the Commissioner is used and there is no
369369 342inconsistency between such disclosures.
370370 343 Section 11: Prohibited acts
371371 344 A shared equity investor is prohibited from engaging in any of the following:
372372 345 (a) Charging any penalty for settling a shared equity investment before the end of the
373373 346shared equity investment’s specified term; 18 of 23
374374 347 (b) Preventing the homeowner from renting or using the property as the homeowner
375375 348chooses, provided that such use complies with applicable law. Nothing in this subsection
376376 349prohibits a shared equity investment from:
377377 350 (1) Requiring that the homeowner notify the shared equity investor of a change in use;
378378 351 (2) Requiring the homeowner to obtain commercially appropriate property insurance in
379379 352connection with any use of the property; or
380380 353 (3) Imposing risk-based pricing adjustments on properties that are not the homeowner’s
381381 354primary residence;
382382 355 (c) Requiring the use of an appraisal or valuation report prepared or managed by an
383383 356appraiser, appraisal management company, or other valuation service provider affiliated with the
384384 357shared equity investor except the homeowner and shared equity investor may agree to the use of
385385 358an affiliated appraiser or appraisal management company to the extent that such affiliation is
386386 359disclosed and consented to in writing by the homeowner;
387387 360 (d) Agreeing to a valuation that differs from the value obtained by the appraisal or other
388388 361third-party means unless:
389389 362 (1) At least one third-party valuation report is obtained and shared with the homeowner to
390390 363provide an indication of market value; and
391391 364 (2) The value that differs from the appraisal or third-party valuation report is fully
392392 365disclosed to the homeowner and the homeowner agrees to the alternative value in writing; 19 of 23
393393 366 (e) Including provisions in the shared equity investment that prohibit the homeowner
394394 367from refinancing a mortgage or lien on a property that is the homeowner’s primary residence,
395395 368provided that:
396396 369 (i) Nothing in this subsection obligates a shared equity investor or shared equity
397397 370investment holder to subordinate their lien to any other lien holder; and
398398 371 (ii) If the homeowner is seeking a cash out refinancing, the shared equity investment may
399399 372require that the proceeds of such refinancing be used to settle the shared equity investment; and
400400 373 (f) Charging an amount to settle a shared equity investment that exceeds the amount
401401 374permitted under Section 9(d) of this chapter, plus reimbursement for payments made on behalf of
402402 375the homeowner or administrative fees charged to the homeowner during the term of the shared
403403 376equity investment.
404404 377 Section 12: Civil actions filed by Commissioner
405405 378 The Commissioner may enforce the provisions of this chapter, or restrain any violations
406406 379thereof, by filing a civil action in any court of competent jurisdiction.
407407 380 Section 13: Penalties
408408 381 Whoever violates section 2 or any rule or regulation promulgated thereunder shall be
409409 382punished by a fine of not more than $2,000 or by imprisonment in the house of correction for not
410410 383more than 2 1/2 years or by imprisonment in state prison for not more than 5 years, or both such
411411 384fine and imprisonment. Each day such violation occurs or continues shall be deemed a separate
412412 385offense. The penalty provision of this section shall be in addition to, and not in lieu of, any other 20 of 23
413413 386law applicable to a licensee or other person for violating section 2 or any rule or regulation made
414414 387thereunder.
415415 388 Section 14: Penalties; no limitation on civil action; review
416416 389 (a) Whenever the Commissioner finds that any licensee or exempt person under section 2
417417 390has violated this chapter or any rule or regulation adopted thereunder, or any other law of the
418418 391commonwealth applicable to the conduct of the business of making home equity investments on
419419 392residential property in the commonwealth, the Commissioner may, by order, in addition to any
420420 393other action authorized under this chapter or any rule or regulation made thereunder, impose a
421421 394penalty upon the person which shall not exceed $5,000 for each violation, up to a maximum of
422422 395$100,000 for such violation plus the costs of investigation. The Commissioner may impose a
423423 396penalty which shall not exceed $5,000 for each violation of this chapter, or any rule or regulation
424424 397adopted thereunder, by a person other than a licensee or exempt person under section 2, plus the
425425 398costs of investigation.
426426 399 (b) Nothing in this section shall limit the right of any individual or entity who has been
427427 400injured as a result of any violation of this chapter by a licensee, or any person other than a
428428 401licensee or exempt person under section 2, to bring an action to recover damages or restitution in
429429 402a court of competent jurisdiction.
430430 403 (c) Any findings or order issued by the Commissioner pursuant to this section shall be
431431 404subject to review as provided in chapter 30A.
432432 405 Section 15: Written notice of intention to prohibit; statement of facts; order of
433433 406prohibition; service 21 of 23
434434 407 (a) Whenever the Commissioner determines that any person has, directly or indirectly,
435435 408violated any section of this chapter or any rule or regulation adopted thereunder, applicable to the
436436 409conduct of the business of making shared equity investments in the commonwealth, or any order
437437 410issued by the Commissioner under this chapter or any written agreement entered between the
438438 411licensee and the Commissioner, the Commissioner may serve upon that person a written notice
439439 412of intention:
440440 413 (1) to prohibit the person from performing in the capacity of a principal employee on
441441 414behalf of any licensee for a period of time that the Commissioner considers necessary to cure the
442442 415condition giving rise to the Commissioner’s action;
443443 416 (2) to prohibit the person from applying for or obtaining a license from the Commissioner
444444 417for a period up to 36 months following the effective date of an order issued under subsection (b)
445445 418or (c); or
446446 419 (3) to prohibit the person from any further participation, in any manner, in the conduct of
447447 420the affairs of a shared equity investor in Massachusetts or to prohibit the person from being
448448 421employed by, an agent of, or operating on behalf of a licensee under this chapter or any other
449449 422business which requires a license from the Commissioner.
450450 423 (b) A written notice issued under subsection (a) shall contain a written statement of the
451451 424facts that support the prohibition and shall give notice of an opportunity for a hearing to be held
452452 425thereon. The hearing shall be fixed for a date not more than 30 days after the date of service upon
453453 426the Commissioner of the request for a hearing. If the person fails to submit a request for a
454454 427hearing within 20 days of service of notice under subsection (a), or otherwise fails to appear in 22 of 23
455455 428person or by a duly authorized representative, the party shall be considered to have consented to
456456 429the issuance of an order of prohibition in accordance with the notice.
457457 430 (c) In the event of the consent under subsection (b), or if after a hearing the
458458 431Commissioner finds that any of the grounds specified in the notice have been established, the
459459 432Commissioner may issue an order of prohibition in accordance with subsection (a) as the
460460 433Commissioner finds appropriate.
461461 434 (d) An order issued under subsection (b) or (c) shall be effective upon service upon the
462462 435person. The Commissioner shall also serve a copy of the order upon the licensee of which the
463463 436person is an employee or on whose behalf the person is performing. The order shall remain in
464464 437effect and enforceable until it is modified, terminated, suspended, or set aside by the
465465 438Commissioner or a court of competent jurisdiction.
466466 439 (e) Except as consented to in writing by the Commissioner, any person who, pursuant to
467467 440an order issued under subsection (b) or (c), has been prohibited from participating in whole or in
468468 441part in the conduct of the affairs of a shared equity investor in Massachusetts may not, while the
469469 442order is in effect, continue or commence to perform in the capacity of a principal employee, or
470470 443otherwise participate in any manner, if so prohibited by order of the Commissioner, in the
471471 444conduct of the affairs of: —
472472 445 (1) any licensee under this chapter;
473473 446 (2) any other business which requires a license from the Commissioner; or
474474 447 (3) any bank, as defined under section 1 of chapter 167 or any subsidiary thereof.
475475 448 Section 16: Rulemaking 23 of 23
476476 449 The Commissioner may adopt, amend or repeal rules and regulations to prescribe safe
477477 450and sound operating standards for licensees, the forms and process used for the license
478478 451application process, and consumer protections, and to aid in the administration and enforcement
479479 452of this chapter.