Maine Amends Law Regulating Shared Appreciation Mortgages

Maine recently passed emergency legislation to regulate shared appreciation products in a manner similar to mortgage loans.  It went into effect immediately when it passed.  The law’s definition of “shared appreciation mortgage loan” is broad, but does not include these products if extended through, in part, a federal or state government agency, or the GSEs.

Among other things, the amendments add shared appreciation mortgage loans to the definition of a “consumer loan” and expand the rulemaking authority to include restrictions and standards for shared appreciation mortgage loans and lenders.

The law itself has shared appreciation mortgage loan restrictions including, but not limited to: (i) prohibiting certain rental restrictions; (ii) prohibiting certain refinancing restrictions; (iii) prohibiting mandatory arbitration clauses; (iv) prohibiting confidentiality clauses regarding the product terms; (v) prohibiting certain loan term extensions; (vi) prohibiting prepayment penalties; and (vii) prohibiting certain demand and acceleration terms.

It also now includes requirements for: (i) the contents of shared appreciation mortgage loans; (ii) property valuation; (iii) counseling; (iv) a 3-day right of rescission; (v) required disclosures; and (vi) the consequence of no advice of counsel to borrower, which includes that a shared appreciation mortgage loan is presumed unconscionable or resulting from an unfair or deceptive trade practice if the borrower was not represented by independent counsel.

Note that the law retroactively applies an October 29, 2025, ruling of the Department of Professional and Financial Regulation, Bureau of Consumer Credit Protection that stated that a shared appreciation mortgage product is a consumer credit transaction under Maine’s Consumer Credit Code, as it applies to mortgage loans and supervised lenders.  If a shared appreciation product on a dwelling or residential real estate does not comply with that ruling and was entered into from October 29, 2025, through the passage of this law, that product is void and unenforceable.