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Massachusetts Senate Bill S705

Massachusetts 2025-2026 Regular Session

Massachusetts Senate Bill S705 Compare Versions

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22 SENATE DOCKET, NO. 862 FILED ON: 1/15/2025
33 SENATE . . . . . . . . . . . . . . No. 705
44 The Commonwealth of Massachusetts
55 _________________
66 PRESENTED BY:
77 John J. Cronin
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 :John J. CroninWorcester and Middlesex 1 of 23
1616 SENATE DOCKET, NO. 862 FILED ON: 1/15/2025
1717 SENATE . . . . . . . . . . . . . . No. 705
1818 By Mr. Cronin, a petition (accompanied by bill, Senate, No. 705) of John J. Cronin for
1919 legislation to require a shared equity investor to have a license with respect to residential
2020 property. Financial Services.
2121 The Commonwealth of Massachusetts
2222 _______________
2323 In the One Hundred and Ninety-Fourth General Court
2424 (2025-2026)
2525 _______________
2626 An Act relative to home investments.
2727 Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
2828 of the same, as follows:
2929 1 SECTION 1: The General Laws are hereby amended by inserting after chapter 255F the
3030 2following new chapter:-
3131 3 Chapter 255G: Shared Equity Investments
3232 4 Section 1: Definitions
3333 5 Section 1. As used in this chapter the following words shall, unless the context otherwise
3434 6requires, have the following meanings:-
3535 7 "Agreed home value" means the value of the residential property at the time of
3636 8origination, as agreed to by both the homeowner and the shared equity investor and does not
3737 9include any discount or risk adjustment. 2 of 23
3838 10 "Annualized cost" means the annualized cost of a shared equity investment, expressed as
3939 11a percentage and calculated as follows: (((settlement payment / investment amount)^(365 / term
4040 12days))-1).
4141 13 “Beginning home equity" means the unencumbered equity in a homeowner's residential
4242 14property after the shared equity investment is consummated, expressed as a percentage and
4343 15calculated as follows: (1-((senior secured debt + investment amount)/ agreed home value)).
4444 16 “Commissioner” means the Massachusetts commissioner of banks.
4545 17 “Control Person” means each member, director, principal officer, and office manager,
4646 18controlling shareholder owning, directly or indirectly, at least twenty-five (25%) of a legal entity,
4747 19and any other person with the authority to direct the management of the legal entity.
4848 20 “Instrumentality created by the United States or any state” means a federal, state,
4949 21municipal government, quasi-governmental entity or a nonprofit agency or corporation
5050 22incorporated under the laws of the commonwealth that has a tax exempt status granted under the
5151 23provisions of section 501(c)(3) of the federal Internal Revenue Code, which exclusively makes
5252 24home equity investments on residential property to be financed with public funds, or negotiates,
5353 25places, assists in the placement of, finds, or offers to negotiate, place, assist in the placement of
5454 26or find home equity investments on residential property to be financed with public funds only
5555 27under a contract with a federal, state, or municipal government, any instrumentality thereof or
5656 28any quasi-governmental entity as determined by the Commissioner. The making of a home
5757 29equity investment shall include being named as the investor on the investment agreement or
5858 30other investment documents. 3 of 23
5959 31 “Homeowner” means the owner of the property that applies for or enters into a shared
6060 32equity investment.
6161 33 "Investment amount" means the gross proceeds of a shared equity investment that is
6262 34provided to the homeowner, before any deduction of third-party fees or amounts charged by the
6363 35shared equity investor.
6464 36 “Multi-state licensing system” means a system involving 1 or more states, the District of
6565 37Columbia, or the Commonwealth of Puerto Rico for the sharing of regulatory information and
6666 38the licensing and application processes, by electronic or other means, for home equity investors.
6767 39 “Residential property” means real property located in the commonwealth containing a
6868 40dwelling house with accommodations for four or less separate households and occupied in whole
6969 41or in part by either the homeowner who obtained the shared equity investment, or a renter who
7070 42pays rent directly to the homeowner.
7171 43 "Senior secured debt" means any obligation secured by a lien on the residential property
7272 44that would be senior to the lien securing obligations under the shared equity investment after
7373 45application of any proceeds from the shared equity investment at closing to reduce the amount of
7474 46any such senior obligations.
7575 47 "Settle" or "settlement" means the process by which a homeowner terminates a shared
7676 48equity investment, as set out in the terms of the shared equity investment.
7777 49 "Settlement payment" means the dollar amount that the homeowner will pay to settle a
7878 50shared equity investment, excluding any amounts paid by the homeowner pursuant to the terms
7979 51of the shared equity investment as (i) reimbursement for payments made on behalf of the 4 of 23
8080 52homeowner, (ii) administrative fees charged to the homeowner during the term of the shared
8181 53equity investment, or (iii) interest required that is not otherwise prohibited by law.
8282 54 “Shared equity investment” means a non-recourse transaction whereby a shared equity
8383 55investor grants an outright sum of money to a homeowner in exchange for an equity interest in
8484 56the homeowner’s residential property or a future obligation to pay a sum upon the occurrence of
8585 57one or more conditions subsequent. A shared equity investment is not a mortgage loan or other
8686 58form of loan as defined in section 3 of chapter 167E.
8787 59 “Shared equity investor” means any person or legal entity engaged in the business of
8888 60making or servicing shared equity investments. The term shall not include: (i) a shared equity
8989 61investment holder; or (ii) a person or entity that purchases or invests solely in an interest in real
9090 62estate other than a shared equity investment.
9191 63 "Shared equity investment application" means the submission of a homeowner's financial
9292 64and property information for purposes of entering a shared equity investment.
9393 65 "Shared equity investment holder" means a person or entity that purchases and passively
9494 66holds a pre-existing shared equity investment, or interest therein, which is serviced by a third-
9595 67party shared equity investor who is licensed under this chapter.
9696 68 "Term days" means the exact number of days that passed between the date on which the
9797 69investment amount is disbursed to the homeowner and the settlement date of the shared equity
9898 70investment.
9999 71 Section 2: Shared equity investor license requirement; exempted entities 5 of 23
100100 72 (a) License Required. No person shall act as a shared equity investor with respect to
101101 73residential property unless first obtaining a license from the Commissioner.
102102 74 (b) Exemptions. The following persons shall be exempt from the requirements of this
103103 75chapter:
104104 76 (i) any person who is employed by or associated with a licensed shared equity investor
105105 77and acting under the direction of said licensed shared equity investor shall not be required to
106106 78obtain such license.
107107 79 (ii) any shared equity investor making twelve or fewer shared equity investments within
108108 80any period of twelve consecutive months; provided, however, that in computing the number of
109109 81shared equity investments, there shall be counted in the shared equity investments of more than
110110 82one partnership, association, trust or corporation, the majority interest of which are owned or
111111 83controlled directly or indirectly by the same person or persons, partnerships, associations, trusts
112112 84or corporations and including in the loans of a partnership or company not incorporated the loans
113113 85of the several members thereof.
114114 86 (iii) a bank as defined in section one of chapter one hundred and sixty-seven, a national
115115 87banking association, a federally chartered credit union, a federal savings and loan association, a
116116 88federal savings bank, or any subsidiary or affiliate of the above, insurance company, or to any
117117 89bank, trust company, savings bank, savings and loan association, credit union or insurance
118118 90company organized under the laws of any other state; provided, however, that except as provided
119119 91herein, such provisions shall apply to any subsidiary or affiliate, as defined by the
120120 92Commissioner, of any such exempted entity and of a bank holding company established in
121121 93accordance with state or federal law; 6 of 23
122122 94 (iv) any instrumentality created by the United States or any state or to any nonprofit,
123123 95public or independent post-secondary educational institution within the commonwealth
124124 96authorized by law to grant degrees by the commonwealth, or by any agency or instrumentality
125125 97thereof, for shared equity investments made by any such educational institution to its faculty or
126126 98staff, or to any charitable organization originally created by a last will and testament before
127127 99January first, nineteen hundred and fifty which makes no more than twelve shared equity
128128 100investments during a twelve month period;
129129 101 (v) a real estate broker or real estate salesman as defined in section eighty-seven PP of
130130 102chapter one hundred and twelve who, in connection with services performed in a prospective real
131131 103estate transaction, provides shared equity investment information or assistance to a buyer if such
132132 104real estate broker or real estate salesman is not compensated for the same in addition to the
133133 105compensation received from the seller for such real estate services.
134134 106 Section 3: License application; multi-state licensing system
135135 107 The application for a license shall be in a form prescribed by the Commissioner. Such
136136 108application shall include the name and addresses where the business of the applicant is located,
137137 109and if the applicant is a legal entity, the names and addresses of each Control Person. The
138138 110Commissioner may require a background investigation of each applicant for a shared equity
139139 111investment license, and each Control Person of an applicant, by means of fingerprint checks by
140140 112the department of criminal justice information services pursuant to section 172 of chapter 6, and
141141 113the Federal Bureau of Investigation for state and national criminal history record checks. Receipt
142142 114of criminal history record information by a private entity shall be prohibited. Each application 7 of 23
143143 115for a license shall be accompanied by an investigation fee. Investigation and license fees shall be
144144 116determined annually by the Commissioner of administration under section 3B of chapter 7.
145145 117 The Commissioner may participate in a multi-state licensing system for shared equity
146146 118investors. The Commissioner may establish requirements for participation by an applicant in a
147147 119multi-state licensing system which may vary from the provisions set out in sections 3 and 5. The
148148 120applicant shall pay directly to such multi-state licensing system any additional fee relating to
149149 121participation in such multi-state licensing system. The Commissioner shall ensure that the multi-
150150 122state licensing system adopts appropriate privacy, data security and security breach notification
151151 123policies. Upon written request, the Commissioner shall make available within 30 days, a copy of
152152 124the contract between the division and the multi-state licensing system that satisfies this section.
153153 125 Section 4: Issuance of license by Commissioner; notice of license denial; appeal
154154 126 Upon the filing of an application for a license, if the Commissioner finds that the
155155 127financial responsibility, character, reputation, integrity and general fitness of the applicant, and
156156 128of the partners or members thereof if the applicant is a partnership or association, and of the
157157 129officers, directors and principal employees if the applicant is a corporation, are such as to
158158 130warrant belief that the business will be operated honestly, fairly, soundly and efficiently in the
159159 131public interest consistent with the purposes of this chapter, he shall thereupon issue the applicant
160160 132a license to engage in the business of a shared equity investor. If the Commissioner shall not so
161161 133find, he shall not issue a license and he shall notify the applicant of the denial. Within twenty
162162 134days thereafter, he shall enter upon his records a written decision and findings containing the
163163 135reasons supporting the denial and shall forthwith give written notice thereof by registered mail to
164164 136the applicant. Within thirty days after the date of such notice, the applicant may appeal from such 8 of 23
165165 137denial to the superior court for Suffolk county, sitting in equity. The court shall hear all pertinent
166166 138evidence and determine the facts and upon the facts as so determined, review said denial and, as
167167 139justice and equity may require, affirm the same or order the Commissioner to issue such license.
168168 140The Commissioner shall approve or deny every application for a license within ninety days after
169169 141the filing thereof, but any failure of the Commissioner to act within such period shall not be
170170 142deemed to be an approval of any such application.
171171 143 Section 5: Information on license; changes; notice requirements
172172 144 Each license shall state the address at which the business is to be conducted and shall
173173 145state the name of the licensee. Business shall at all times be conducted in the name of the
174174 146licensee as it appears on the license. A copy of such license or license number shall be posted on
175175 147the licensee’s website.
176176 148 Such license shall not be transferable or assignable and shall expire annually on a date
177177 149determined by the Commissioner.
178178 150 Any change of location or closing of a place of business of the licensee, either at the
179179 151address stated on the license or at a place other than said address stated on the license, shall
180180 152require prior written notice thereof to the Commissioner. Such notice shall be in writing setting
181181 153forth the reason therefor and shall be filed with the Commissioner at least thirty days prior to any
182182 154such relocation or closing.
183183 155 If there shall be any change among the Control Persons of any licensee, the licensee shall
184184 156notify the Commissioner in a timely manner of the name, address and occupation of each new
185185 157member, officer, partner or director, and provide such other information as the Commissioner
186186 158may require. 9 of 23
187187 159 Section 6: License suspension or revocation; notice and hearing
188188 160 The Commissioner may suspend or revoke any license issued pursuant to this chapter if
189189 161said Commissioner finds that:
190190 162 (i) the licensee has violated any provision of this chapter or any rule or regulation
191191 163adopted hereunder, or any other law applicable to the conduct of its business; or
192192 164 (ii) any fact or condition exists which, if it had existed at the time of the original
193193 165application for such license, would have warranted the Commissioner in refusing to issue such
194194 166license.
195195 167 Except as provided in section seven, no license shall be revoked or suspended except
196196 168after notice and a hearing thereon pursuant to chapter thirty A.
197197 169 A licensee may surrender a license by delivering to the Commissioner written notice that
198198 170it thereby surrenders such license, but such surrender shall not affect the civil or criminal liability
199199 171of the licensee for acts committed before such surrender.
200200 172 No revocation, suspension or surrender of any license shall impair or affect the obligation
201201 173of any pre-existing lawful contract between the licensee and any person.
202202 174 Section 7: Commissioner’s order to cease and desist from unlawful act or practice; prior
203203 175notice and opportunity for hearing; temporary order
204204 176 (a) If the Commissioner determines, after giving notice of and opportunity for a hearing,
205205 177that a licensee has engaged in or is about to engage in an act or practice constituting a violation
206206 178of a provision of this chapter or a rule, regulation or order hereunder, he may order such licensee 10 of 23
207207 179to cease and desist from such unlawful act or practice and take such affirmative action as in his
208208 180judgment will effect the purposes of this chapter.
209209 181 (b) If the Commissioner makes written findings of fact that the public interest will be
210210 182irreparably harmed by delay in issuing an order under subsection (a) he may issue a temporary
211211 183cease and desist order. Upon the entry of a temporary cease and desist order, the Commissioner
212212 184shall promptly notify, in writing, the licensee affected thereby that such order has been so
213213 185entered, the reasons therefor, and that within twenty days after the receipt of a written request
214214 186from such licensee, the matter will be scheduled for hearing to determine whether or not such
215215 187temporary order shall become permanent and final. If no such hearing is requested and none is
216216 188ordered by the Commissioner, the order shall remain in effect until it is modified or vacated by
217217 189the Commissioner. If a hearing is requested or ordered, the Commissioner, after giving notice of
218218 190and opportunity for a hearing to the licensee subject to said order, shall, by written finding of
219219 191facts and conclusions of law, vacate, modify or make permanent the order.
220220 192 (c) No order under this section, except an order issued pursuant to subsection (b), may be
221221 193entered without prior notice of and opportunity for a hearing. The Commissioner may vacate or
222222 194modify an order under this section upon finding that the conditions which required such an order
223223 195have changed and that it is in the public interest to so vacate or modify.
224224 196 Any order issued pursuant to this section shall be subject to review as provided in chapter
225225 197thirty A.
226226 198 Section 8: Annual report; examination of business records
227227 199 (a) Annual Report. Each licensee shall annually, on or before a date determined by the
228228 200Commissioner, file a report with the Commissioner containing such information as said 11 of 23
229229 201Commissioner may require concerning the business and operations conducted by the licensee in
230230 202the commonwealth during the preceding calendar year.
231231 203 (b) Recordkeeping. A licensee shall keep and use such business records in such form and
232232 204at such location as said Commissioner shall, by regulation, determine, which shall enable said
233233 205Commissioner to determine whether such licensee is complying with the provisions of this
234234 206chapter and any rules or regulations promulgated hereunder by said Commissioner and any other
235235 207law, rule or regulation applicable to the conduct of the business for which it is licensed under this
236236 208chapter. Nothing in this section shall be construed to permit any such licensee to destroy original
237237 209records or documents. Each such licensee shall preserve all such business records for a minimum
238238 210of three (3) years, or such longer period as the Commissioner may prescribe by regulation.
239239 211Notwithstanding the provisions of any general or special law or the Massachusetts Rules of Civil
240240 212Procedure to the contrary, service of a subpoena for business records upon a licensee, delivered
241241 213to an office of such licensee located within the commonwealth shall be deemed to have been
242242 214served at the location, whether within or outside the commonwealth, where the original business
243243 215records or documents are kept or maintained.
244244 216 (c) Examinations. The Commissioner shall inspect a licensee’s relevant records and
245245 217evidence of compliance with the provisions of this chapter or any rule or regulation issued
246246 218hereunder and with any other law, rule or regulation applicable to the conduct of the business for
247247 219which it is licensed under this chapter. For the purposes of such inspection, the Commissioner or
248248 220a representative of the Commissioner shall have access to the offices and place of business,
249249 221books, accounts, papers, records and files of all such licensees. The Commissioner, and any
250250 222person designated by him, may require the attendance and testimony of any person whom the
251251 223Commissioner deems necessary relative to the conduct and operation of such business. The total 12 of 23
252252 224cost for any such inspection, which shall be paid by the licensee within 30 days after the receipt
253253 225of an invoice therefore, shall be in accordance with fees determined annually by the
254254 226Commissioner of administration pursuant to section 3B of chapter 7, including expenses for
255255 227necessary travel outside the commonwealth for the purposes of conducting such inspections.
256256 228 During the course of such inspection, a shared equity investor that has entered into 50 or
257257 229more shared equity investments in the last calendar year shall be examined for its compliance
258258 230with applicable anti-discrimination laws and laws prohibiting unfair, deceptive, or abusive acts
259259 231or practices in consumer financial products or services. Such examination shall also include an
260260 232evaluation of such shared equity investor’s: (a) origination of shared equity investments and
261261 233consistency with safe and sound business practices; (b) efforts working with homeowners to
262262 234resolve performance defaults; and (c) disclosure and education of homeowners about the terms
263263 235of shared equity investment products. The Commissioner may make rules prescribing additional
264264 236factors for measuring a licensee’s performance.
265265 237 Upon the completion of such examination, the Commissioner shall prepare a written
266266 238evaluation of such shared equity investor’s record of performance, which shall be open to public
267267 239inspection upon request, and said written evaluation shall include: (a) the assessment factors
268268 240utilized to determine the shared equity investor’s descriptive rating; (b) the Commissioner’s
269269 241conclusions with respect to each such assessment factor; (c) a discussion of the facts supporting
270270 242such conclusions; and (d) the shared equity investor’s descriptive rating and the basis therefor.
271271 243 Based upon such examination, the shared equity investor shall be assigned 1 of the
272272 244following descriptive ratings: (a) outstanding record of performance; (b) high satisfactory record 13 of 23
273273 245of performance; (c) satisfactory record of performance; (d) needs to improve record of
274274 246performance; or (e) substantial noncompliance.
275275 247 In considering an application from a licensed shared equity investor for a renewal of a
276276 248license issued pursuant to this chapter, the Commissioner shall consider, but not be limited to,
277277 249the record of performance of any such shared equity investor in accordance with this section.
278278 250Said record of performance may provide the basis for the denial of any such renewal application.
279279 251 The Commissioner shall adopt regulations implementing the requirements of this section.
280280 252 The Commissioner shall preserve a full record of each such examination of a licensee,
281281 253including a statement of its condition. All records of investigation and reports of examination by
282282 254the commissioner, including work papers, information derived from such reports or in response
283283 255to such reports, and any copies thereof in the possession of any licensee under the supervision of
284284 256the commissioner, shall be confidential and privileged communications, shall not be subject to
285285 257subpoena and shall not be a public record under clause Twenty-sixth of section 7 of chapter 4.
286286 258For the purpose of this paragraph, records of investigation and reports of examinations shall
287287 259include records of investigation and reports of examinations conducted by any financial
288288 260institution regulatory agency of the federal government and any other state, and of any foreign
289289 261government which are considered confidential by such agency or foreign government and which
290290 262are in possession of the Commissioner. In any proceeding before a court, the court may issue a
291291 263protective order to seal the record protecting the confidentiality of any such record, other than
292292 264any such record on file with the court or filed in connection with the court proceeding, and the
293293 265court may exclude the public from any portion of a proceeding at which any such record may be
294294 266disclosed. Copies of such reports of examination shall be furnished to a licensee for its use only 14 of 23
295295 267and shall not be exhibited to any other person, organization or agency without prior written
296296 268approval by the Commissioner. The Commissioner may, in his discretion, furnish to regulatory
297297 269agencies of the federal government, of other states, or of foreign countries and any law
298298 270enforcement agency, such information, reports, inspections and statements relating to the
299299 271licensees under his supervision.
300300 272 Section 9: Shared equity investor obligations
301301 273 (a) Recission period. A shared equity investor shall provide at least three business days in
302302 274which the homeowner may rescind their acceptance of the shared equity investment before such
303303 275shared equity investment becomes effective and binding for the homeowner. The homeowner
304304 276shall submit the rescission notice in writing to the shared equity investor within such designated
305305 277rescission period.
306306 278 (b) Except in connection with a home purchase transaction, the homeowner's beginning
307307 279home equity must be equal to or greater than 10 percent. For purposes of this provision, if any
308308 280portion of the investment amount will be used to pay down existing obligations secured by the
309309 281residential property, the homeowner’s beginning home equity will be calculated after application
310310 282of the investment amount to pay down such obligations.
311311 283 (c) All appraisals or other valuation reports used to determine the agreed home value
312312 284must meet industry standards and be conducted by an independent third party, unless an
313313 285affiliated appraisal or valuation is disclosed and consented to in writing by the homeowner.
314314 286Copies of all valuation reports must be provided to the homeowner.
315315 287 (d) The annualized cost of a shared equity investment may not exceed 20 percent. 15 of 23
316316 288 Section 10: Disclosure requirements
317317 289 (a) Prior to entering into a shared equity investment, a shared equity investor shall
318318 290provide a disclosure to the homeowner in a form prescribed by the Commissioner. The
319319 291disclosure shall contain at least the following information:
320320 292 (i) A clear and conspicuous statement that (1) by entering into the shared equity
321321 293investment, a lien will be placed on the property and that failure to comply with the terms of the
322322 294shared equity investment or an inability to settle the shared equity investment may result in the
323323 295homeowner losing their property, and (2) that the homeowner should obtain the advice of an
324324 296attorney before proceeding with the transaction.
325325 297 (ii) A summary of the terms of the shared equity investment including:
326326 298 (1) The investment amount;
327327 299 (2) An itemization of any charges and payments to third parties and any fees paid to the
328328 300shared equity investor which are deducted from the investment amount;
329329 301 (3) The net proceeds to be delivered to the homeowner after the expiration of the
330330 302recission period;
331331 303 (4) The maximum term of the shared equity investment;
332332 304 (5) How the homeowner can settle the shared equity investment together with an
333333 305explanation of how the settlement payment will be calculated; and
334334 306 (6) A summary of the types of fees that may be charged in connection with settling the
335335 307shared equity investment. 16 of 23
336336 308 (iii)(1) The agreed home value without adjustment and the method used to determine the
337337 309agreed home value; and (2) if the agreed home value is adjusted for any discounts, risk
338338 310adjustments, or enhancements for purposes of the shared equity investment, the amount of such
339339 311adjustments and the value of the property used for purposes of calculating the shared equity
340340 312investor’s equity interest in the property;
341341 313 (iv) The method of determining the final value of the property that is the subject of the
342342 314shared equity investment upon settlement of the shared equity investment;
343343 315 (v) The maximum equity interest in the property that the shared equity investor may
344344 316receive under the terms of the shared equity investment or an explanation of any other limits on
345345 317the amount that the shared equity investor may receive under the shared equity investment;
346346 318 (vi) Any other amounts charged in connection with the shared equity investment;
347347 319 (vii) Settlement examples for the shared equity investment after three years, five years,
348348 32010 years, 15 years, and 30 years, in each case up to the maximum term of the applicable shared
349349 321equity investment.
350350 322 (1) For each settlement time frame, examples shall be provided based on:
351351 323 (A) No change in the value of the property;
352352 324 (B) A total depreciation of 10 percent;
353353 325 (C) Annual appreciation of three and one half percent;
354354 326 (D) Annual appreciation of five and one half percent; and 17 of 23
355355 327 (E) The actual annualized change in value of residential real property in Massachusetts
356356 328over the prior five year period, measured from the most recent available data point in the All-
357357 329Transactions House Price Index as published by the Federal Reserve Bank of St. Louis.
358358 330 (2) For each combination of settlement time frame and property change in value specified
359359 331in subsection (vii)(1) of this section, the homeowner shall be provided with:
360360 332 (A) The projected final value of the property;
361361 333 (B) The equity interest that the shared equity investor would be entitled to receive,
362362 334expressed as a percentage of projected final property value;
363363 335 (C) The dollar value of such equity interest, and if any cap applies, the capped dollar
364364 336value required to settle the shared equity investment; and
365365 337 (D) An annual percentage rate equivalent based on the investment amount, the gross
366366 338estimated settlement cost, and the number of days from the disbursement of the investment
367367 339amount to settlement.
368368 340 (b) Shared equity investors may provide homeowners with additional disclosures
369369 341provided that the form disclosure prescribed by the Commissioner is used and there is no
370370 342inconsistency between such disclosures.
371371 343 Section 11: Prohibited acts
372372 344 A shared equity investor is prohibited from engaging in any of the following:
373373 345 (a) Charging any penalty for settling a shared equity investment before the end of the
374374 346shared equity investment’s specified term; 18 of 23
375375 347 (b) Preventing the homeowner from renting or using the property as the homeowner
376376 348chooses, provided that such use complies with applicable law. Nothing in this subsection
377377 349prohibits a shared equity investment from:
378378 350 (1) Requiring that the homeowner notify the shared equity investor of a change in use;
379379 351 (2) Requiring the homeowner to obtain commercially appropriate property insurance in
380380 352connection with any use of the property; or
381381 353 (3) Imposing risk-based pricing adjustments on properties that are not the homeowner’s
382382 354primary residence;
383383 355 (c) Requiring the use of an appraisal or valuation report prepared or managed by an
384384 356appraiser, appraisal management company, or other valuation service provider affiliated with the
385385 357shared equity investor except the homeowner and shared equity investor may agree to the use of
386386 358an affiliated appraiser or appraisal management company to the extent that such affiliation is
387387 359disclosed and consented to in writing by the homeowner;
388388 360 (d) Agreeing to a valuation that differs from the value obtained by the appraisal or other
389389 361third-party means unless:
390390 362 (1) At least one third-party valuation report is obtained and shared with the homeowner to
391391 363provide an indication of market value; and
392392 364 (2) The value that differs from the appraisal or third-party valuation report is fully
393393 365disclosed to the homeowner and the homeowner agrees to the alternative value in writing; 19 of 23
394394 366 (e) Including provisions in the shared equity investment that prohibit the homeowner
395395 367from refinancing a mortgage or lien on a property that is the homeowner’s primary residence,
396396 368provided that:
397397 369 (i) Nothing in this subsection obligates a shared equity investor or shared equity
398398 370investment holder to subordinate their lien to any other lien holder; and
399399 371 (ii) If the homeowner is seeking a cash out refinancing, the shared equity investment may
400400 372require that the proceeds of such refinancing be used to settle the shared equity investment; and
401401 373 (f) Charging an amount to settle a shared equity investment that exceeds the amount
402402 374permitted under Section 9(d) of this chapter, plus reimbursement for payments made on behalf of
403403 375the homeowner or administrative fees charged to the homeowner during the term of the shared
404404 376equity investment.
405405 377 Section 12: Civil actions filed by Commissioner
406406 378 The Commissioner may enforce the provisions of this chapter, or restrain any violations
407407 379thereof, by filing a civil action in any court of competent jurisdiction.
408408 380 Section 13: Penalties
409409 381 Whoever violates section 2 or any rule or regulation promulgated thereunder shall be
410410 382punished by a fine of not more than $2,000 or by imprisonment in the house of correction for not
411411 383more than 2 1/2 years or by imprisonment in state prison for not more than 5 years, or both such
412412 384fine and imprisonment. Each day such violation occurs or continues shall be deemed a separate
413413 385offense. The penalty provision of this section shall be in addition to, and not in lieu of, any other 20 of 23
414414 386law applicable to a licensee or other person for violating section 2 or any rule or regulation made
415415 387thereunder.
416416 388 Section 14: Penalties; no limitation on civil action; review
417417 389 (a) Whenever the Commissioner finds that any licensee or exempt person under section 2
418418 390has violated this chapter or any rule or regulation adopted thereunder, or any other law of the
419419 391commonwealth applicable to the conduct of the business of making home equity investments on
420420 392residential property in the commonwealth, the Commissioner may, by order, in addition to any
421421 393other action authorized under this chapter or any rule or regulation made thereunder, impose a
422422 394penalty upon the person which shall not exceed $5,000 for each violation, up to a maximum of
423423 395$100,000 for such violation plus the costs of investigation. The Commissioner may impose a
424424 396penalty which shall not exceed $5,000 for each violation of this chapter, or any rule or regulation
425425 397adopted thereunder, by a person other than a licensee or exempt person under section 2, plus the
426426 398costs of investigation.
427427 399 (b) Nothing in this section shall limit the right of any individual or entity who has been
428428 400injured as a result of any violation of this chapter by a licensee, or any person other than a
429429 401licensee or exempt person under section 2, to bring an action to recover damages or restitution in
430430 402a court of competent jurisdiction.
431431 403 (c) Any findings or order issued by the Commissioner pursuant to this section shall be
432432 404subject to review as provided in chapter 30A.
433433 405 Section 15: Written notice of intention to prohibit; statement of facts; order of
434434 406prohibition; service 21 of 23
435435 407 (a) Whenever the Commissioner determines that any person has, directly or indirectly,
436436 408violated any section of this chapter or any rule or regulation adopted thereunder, applicable to the
437437 409conduct of the business of making shared equity investments in the commonwealth, or any order
438438 410issued by the Commissioner under this chapter or any written agreement entered between the
439439 411licensee and the Commissioner, the Commissioner may serve upon that person a written notice
440440 412of intention:
441441 413 (1) to prohibit the person from performing in the capacity of a principal employee on
442442 414behalf of any licensee for a period of time that the Commissioner considers necessary to cure the
443443 415condition giving rise to the Commissioner’s action;
444444 416 (2) to prohibit the person from applying for or obtaining a license from the Commissioner
445445 417for a period up to 36 months following the effective date of an order issued under subsection (b)
446446 418or (c); or
447447 419 (3) to prohibit the person from any further participation, in any manner, in the conduct of
448448 420the affairs of a shared equity investor in Massachusetts or to prohibit the person from being
449449 421employed by, an agent of, or operating on behalf of a licensee under this chapter or any other
450450 422business which requires a license from the Commissioner.
451451 423 (b) A written notice issued under subsection (a) shall contain a written statement of the
452452 424facts that support the prohibition and shall give notice of an opportunity for a hearing to be held
453453 425thereon. The hearing shall be fixed for a date not more than 30 days after the date of service upon
454454 426the Commissioner of the request for a hearing. If the person fails to submit a request for a
455455 427hearing within 20 days of service of notice under subsection (a), or otherwise fails to appear in 22 of 23
456456 428person or by a duly authorized representative, the party shall be considered to have consented to
457457 429the issuance of an order of prohibition in accordance with the notice.
458458 430 (c) In the event of the consent under subsection (b), or if after a hearing the
459459 431Commissioner finds that any of the grounds specified in the notice have been established, the
460460 432Commissioner may issue an order of prohibition in accordance with subsection (a) as the
461461 433Commissioner finds appropriate.
462462 434 (d) An order issued under subsection (b) or (c) shall be effective upon service upon the
463463 435person. The Commissioner shall also serve a copy of the order upon the licensee of which the
464464 436person is an employee or on whose behalf the person is performing. The order shall remain in
465465 437effect and enforceable until it is modified, terminated, suspended, or set aside by the
466466 438Commissioner or a court of competent jurisdiction.
467467 439 (e) Except as consented to in writing by the Commissioner, any person who, pursuant to
468468 440an order issued under subsection (b) or (c), has been prohibited from participating in whole or in
469469 441part in the conduct of the affairs of a shared equity investor in Massachusetts may not, while the
470470 442order is in effect, continue or commence to perform in the capacity of a principal employee, or
471471 443otherwise participate in any manner, if so prohibited by order of the Commissioner, in the
472472 444conduct of the affairs of: —
473473 445 (1) any licensee under this chapter;
474474 446 (2) any other business which requires a license from the Commissioner; or
475475 447 (3) any bank, as defined under section 1 of chapter 167 or any subsidiary thereof.
476476 448 Section 16: Rulemaking 23 of 23
477477 449 The Commissioner may adopt, amend or repeal rules and regulations to prescribe safe
478478 450and sound operating standards for licensees, the forms and process used for the license
479479 451application process, and consumer protections, and to aid in the administration and enforcement
480480 452of this chapter.