On April 13, 2026, Maine enacted new laws (L.D. 1901) that are intended to have an immediate and retroactive impact on the origination and servicing of shared appreciation mortgage loans secured by residential real estate located in Maine.
According to the Coalition for Home Equity Partnership (CHEP), which represents the shared equity industry that this bill relates to, no shared equity provider has ever issued a shared appreciation mortgage loan in Maine. The bill should therefore have no retroactive impact, but it is expected to prevent providers from offering their product in Maine.
L.D. 1901 amends existing provisions and implements new provisions of Maine’s Consumer Credit Code. As a result, a shared appreciation mortgage loan is now expressly included within the definition of a “consumer loan” under the code and is therefore subject to the code’s pre-existing provisions governing consumer loans, as well as a new body of law specifically governing shared appreciation mortgages. Additionally, a shared appreciation mortgage loan can be subject to the code’s regulations governing high-cost mortgage loans if the loan exceeds relevant points and fees thresholds.
The preamble to L.D. 1901 asserts that the regulation of shared appreciation mortgage loans constitutes “an emergency within the meaning of the Constitution of Maine,” and as a result, L.D. 1901 took immediate effect on April 13, 2026.
Definition of Shared Appreciation Mortgage Loan
L.D. 1901 defines a shared appreciation mortgage loan broadly to include “a writing evidencing a transaction or any option, any future or any other derivative between a person and a consumer according to which the consumer receives money or any other item of value in exchange for an interest or future interest in a dwelling or residential real estate or a future obligation to pay an amount based on the value of the dwelling or residential real estate that is secured by a mortgage, a deed of trust or an equivalent consensual security interest in the dwelling or residential real estate on the occurrence of an event, such as the transfer of ownership; a maturity date; the death of the consumer; or any other event contemplated by the writing.” Government-sponsored shared appreciation mortgage loans are excluded from coverage under L.D. 1901.
Immediate Impacts on Lenders and Servicers
L.D. 1901 imposes robust restrictions on shared appreciation mortgage loans. For example, L.D. 1901 imposes limitations on the terms of the loan agreement, including:
- Limited Restrictions on Senior Lien Refinancing – The loan agreement cannot contain a provision restricting the borrower’s ability to refinance an existing senior mortgage through a rate-and-term refinancing, “as long as the principal balance on the new mortgage loan does not exceed the unpaid principal balance of the mortgage loan being refinanced plus customary and reasonable transaction costs.”
- No arbitration – The loan agreement may not contain a mandatory arbitration clause in accordance with federal law, and it may not include any confidentiality provisions regarding the loan’s terms.
- No prepayment penalty – The loan agreement may not impose a prepayment penalty fee.
- Limits on Acceleration – The loan agreement may only allow for the acceleration in advance of the original maturity date in the following scenarios:
- There is fraud or material misrepresentation by the borrower in connection with the loan or open-end credit agreement;
- The borrower fails to meet the payment terms of the agreement for any outstanding balance that results in a default in payment under the loan; or
- There is an action or inaction by the borrower that adversely affects the creditor’s security for the loan or any right of the creditor in the security.
- Notice – The loan agreement must contain a provision requiring the creditor to provide 90 days’ written notice to the borrower regarding any action the borrower must take that, if not taken, would negatively impact the borrower.
L.D. 1901 also impacts the actions of the lender/servicer, including:
- Disclosures – Before consummation of the loan, the lender must disclose the “the annualized cost, equity share payment amount, settlement payment amount and annual percentage rate for each year of the term of the loan based on a real estate appreciation index prescribed by the administrator by rule.” L.D. 1901 requires the lender to calculate “annualized cost” based on a prescribed formula.
- Set Formula – The parties to a shared appreciation mortgage loan may not change the settlement payment formula once it is agreed upon.
- Term Extensions Must be Mutual – The servicer is significantly limited in its ability to extend the term of the shared appreciation mortgage loan without the express written consent of the borrower.
- Counseling – The lender is required to obtain certification the borrower received counseling regarding the features and costs of the shared appreciation mortgage loan.
It is also worth noting that L.D. 1901 strongly encourages borrower-representation in the closing of the agreement as it states that a “shared appreciation mortgage loan is presumed to be unconscionable or the result of an unfair or deceptive trade practice unless the borrower was represented by independent counsel in connection with all aspects of the origination of the shared
appreciation mortgage loan and in the granting and execution of the mortgage.”
Retroactive Impacts on Lenders and Servicers
L.D. 1901 also “adopts the ruling of the Department of Professional and Financial Regulation, Bureau of Consumer Credit Protection, which took effect October 29, 2025, that a shared appreciation mortgage product is a consumer credit transaction subject to the provisions of the Maine Revised Statutes, Title 9-A applicable to mortgage loans and that providers of these products are supervised lenders under that Title.” As a result, shared appreciation mortgage loans secured by residential real estate in Maine that were originated on are after October 29, 2025, are “void and unenforceable” if they do not comply with the provisions of the October 29, 2025, ruling.
Future Impacts on Lenders and Servicers
L.D. 1901 makes multiple references to future regulations from Maine’s Bureau of Consumer Credit Protection. It appears these future regulations will govern origination-related disclosures, but based on the breadth of L.D. 1901, these future regulations may impact various stages of the life of a shared appreciation mortgage loan.
Takeaways for the Shared Appreciation Mortgage Industry
Shared appreciation mortgage loan lenders, servicers, and other related parties should be sure to review L.D. 1901 to account for its impact.
While the overall impact of L.D. 1901 remains to be seen, CHEP generally believes this legislation reflects a fundamental mismatch between the traditional mortgage regulatory framework and the structural characteristics of shared appreciation products. In its “strong rebuke of the Maine Legislature’s passage of L.D. 1901,” CHEP explained that these products do not include core loan features such as a principal balance, interest rate, amortization schedule, or periodic payments, which creates significant uncertainty when applying disclosure and compliance regimes designed for conventional mortgage lending.
As a result, CHEP has stated that this bill will function less as a regulatory framework and more as a prohibition of the product in Maine.
In a statement made to Maine’s governor, CHEP President Cliff Andrews said: “We are not asking to operate without accountability; we are asking for a framework we can comply with that ensures Mainers can access the equity they have built in their homes when they need it most.”
