The Pennsylvania State House passed bipartisan legislation on June 2 to regulate shared equity agreements, a type of home lending product. The bill was approved by a vote of 190-11 and is co-sponsored by state representatives from Allegheny and Schuylkill counties.
Shared appreciation agreements are contracts where homeowners receive funds in exchange for granting a third party a future interest in the appreciation, equity, or value of their home. The new legislation would add shared equity agreements to existing laws that provide statutory safeguards for other home-secured financial products such as residential mortgages.
“For most Pennsylvanians, their home is their most valuable asset,” one sponsor said. “Homeowners may enter into these agreements believing they are making a beneficial decision for their family’s future, but when marketing is unfair or deceptive, they could face significant financial hardship down the road.”
“Given the importance of homes and their value to so many Pennsylvanians, we must expeditiously bring shared equity agreements into a regulatory framework similar to that of mortgages so that Pennsylvanians can be assured of transparency and protection against predatory lending practices in these products.”
The legislation would require disclosure requirements for shared equity agreements as well as foreclosure protections and remedies for violations. Under such an agreement, if the home’s value increases significantly over time, homeowners may have to pay much more than the original amount received when satisfying the contract.
“This bill will ensure that homeowners understand the value of their home and how that value will grow over time,” another sponsor said. “Intentionally vague language can cost Pennsylvanians a great deal of money in the future just for a short-term gain. We need greater transparency so that our neighbors know what goes into signing onto one of these agreements.”
“As co-chair of the bipartisan Pennsylvania Housing Caucus, I supported this legislation because Pennsylvanians deserve clear, straightforward information when entering complex financial agreements tied to their homes,” another representative said. “This bill strengthens transparency and establishes important safeguards to protect homeowners while still allowing responsible innovation in the housing finance market.”
The passage follows actions by Point—a company marketing shared equity agreements—which opposed the legislation with offers such as $50 Amazon gift cards prior to committee consideration without notifying members or committees. House Bill 2120 now moves to the state Senate.
