Massachusetts SD 862: An Act relative to home investments

Bill Text

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SENATE DOCKET, NO. 862 FILED ON: 1/15/2025
SENATE . . . . . . . . . . . . . . No. 705

The Commonwealth of Massachusetts
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PRESENTED BY:
John J. Cronin
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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act relative to home investments.
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PETITION OF:

NAME: DISTRICT/ADDRESS:
John J. Cronin Worcester and Middlesex

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SENATE DOCKET, NO. 862 FILED ON: 1/15/2025
SENATE . . . . . . . . . . . . . . No. 705
By Mr. Cronin, a petition (accompanied by bill, Senate, No. 705) of John J. Cronin for
legislation to require a shared equity investor to have a license with respect to residential
property. Financial Services.

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Fourth General Court
(2025-2026)
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An Act relative to home investments.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:

1 SECTION 1: The General Laws are hereby amended by inserting after chapter 255F the
2 following new chapter:-
3 Chapter 255G: Shared Equity Investments
4 Section 1: Definitions
5 Section 1. As used in this chapter the following words shall, unless the context otherwise
6 requires, have the following meanings:-
7 "Agreed home value" means the value of the residential property at the time of
8 origination, as agreed to by both the homeowner and the shared equity investor and does not
9 include any discount or risk adjustment.

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10 "Annualized cost" means the annualized cost of a shared equity investment, expressed as
11 a percentage and calculated as follows: (((settlement payment / investment amount)^(365 / term
12 days))-1).
13 “Beginning home equity" means the unencumbered equity in a homeowner's residential
14 property after the shared equity investment is consummated, expressed as a percentage and
15 calculated as follows: (1-((senior secured debt + investment amount)/ agreed home value)).
16 “Commissioner” means the Massachusetts commissioner of banks.
17 “Control Person” means each member, director, principal officer, and office manager,
18 controlling shareholder owning, directly or indirectly, at least twenty-five (25%) of a legal entity,
19 and any other person with the authority to direct the management of the legal entity.
20 “Instrumentality created by the United States or any state” means a federal, state,
21 municipal government, quasi-governmental entity or a nonprofit agency or corporation
22 incorporated under the laws of the commonwealth that has a tax exempt status granted under the
23 provisions of section 501(c)(3) of the federal Internal Revenue Code, which exclusively makes
24 home equity investments on residential property to be financed with public funds, or negotiates,
25 places, assists in the placement of, finds, or offers to negotiate, place, assist in the placement of
26 or find home equity investments on residential property to be financed with public funds only
27 under a contract with a federal, state, or municipal government, any instrumentality thereof or
28 any quasi-governmental entity as determined by the Commissioner. The making of a home
29 equity investment shall include being named as the investor on the investment agreement or
30 other investment documents.

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31 “Homeowner” means the owner of the property that applies for or enters into a shared
32 equity investment.
33 "Investment amount" means the gross proceeds of a shared equity investment that is
34 provided to the homeowner, before any deduction of third-party fees or amounts charged by the
35 shared equity investor.
36 “Multi-state licensing system” means a system involving 1 or more states, the District of
37 Columbia, or the Commonwealth of Puerto Rico for the sharing of regulatory information and
38 the licensing and application processes, by electronic or other means, for home equity investors.
39 “Residential property” means real property located in the commonwealth containing a
40 dwelling house with accommodations for four or less separate households and occupied in whole
41 or in part by either the homeowner who obtained the shared equity investment, or a renter who
42 pays rent directly to the homeowner.
43 "Senior secured debt" means any obligation secured by a lien on the residential property
44 that would be senior to the lien securing obligations under the shared equity investment after
45 application of any proceeds from the shared equity investment at closing to reduce the amount of
46 any such senior obligations.
47 "Settle" or "settlement" means the process by which a homeowner terminates a shared
48 equity investment, as set out in the terms of the shared equity investment.
49 "Settlement payment" means the dollar amount that the homeowner w