Pennsylvania lawmakers set to vote on home equity investment regulations

Pennsylvania lawmakers are moving to bring home equity investment (HEI) companies under state banking oversight, with a floor vote scheduled June 1.

The legislation, The solicitation and subsequent testimonials came without notice to the committee, Venkat added.

“These actions by “I can’t speak for other providers, but I can tell you that we provide, I think, a very solid homeowner education, a very solid originator training and ongoing education,” Bjelac said in an interview with HousingWire.

Bill would close ‘gray area’ loophole

House Bill 2120 would place shared appreciation agreements — contracts in which a homeowner receives funds in exchange for granting a third party future interest in the appreciation, equity or value of the home — under the same statutory safeguards as other financial products secured by real estate.

This would include disclosure requirements, “These products aren’t considered loans,” Wendy Gilch, a Franklin Park consumer advocate who brought the issue to lawmakers, told the Gazette. “They’re not written in our laws. They’re in this weird gray area, so there’s many [banking] rules and consumer protections that don’t apply.”

Industry representatives argue the products are fundamentally different from loans.

Cliff Andrews, president of the Coalition for Home Equity Partnerships, said that applying banking rules designed for mortgages does not fit a product set with no monthly payment and no interest rate.

“Any regulation or law that would say you need to have an APR, we fundamentally just can’t calculate such a number,” he told the Gazette.

Venkat added that under a shared appreciation agreement, the more a home appreciates, the more the homeowner must pay to satisfy the contract — often far exceeding the amount originally received.

Parallel to MV Realty crackdown

Unlike MV Realty’s model — which critics say functioned as a high-interest loan secured by a property lien — shared equity investments do not charge interest or require monthly payments.

Yet both products have faced similar criticisms. Homeowners who fail to understand the long-term financial consequences of the contracts can tie up what’s often their most valuable asset.

‘You sell your soul to the devil’

“For most Pennsylvanians, their home is their most valuable asset,” Venkat said during public testimony in March. “Homeowners may enter into these agreements believing they are making a beneficial decision for their family’s future, but when marketing is