A. "Administrator" has the same meaning as set forth in section 1‑301.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

A-1. "Annualized cost" means the annualized cost of a shared appreciation mortgage loan, expressed as a percentage and calculated as follows: (((settlement payment/payment amount)^(365/term days))-1), otherwise expressed as $\left({\left(\frac{settlementpayment}{paymentamount}\right)}^{\left(\frac{365}{termdays}\right)}-1\right)$, or as established by rule adopted by the administrator pursuant to section 8‑504, subsection 2.   [PL 2025, c. 653, Pt. A, §10 (NEW).]

B. "Bona fide discount points" means an amount knowingly paid by a borrower for the express purpose of reducing, and that in fact does result in a bona fide reduction of, the interest rate applicable to a residential mortgage loan, as long as the undiscounted interest rate for the residential mortgage loan does not exceed the conventional mortgage rate by more than 2 percentage points for a residential mortgage loan secured by a first lien or by 3 1/2 percentage points for a residential mortgage loan secured by a subordinated lien.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

C. "Borrower" means any natural person obligated to repay a loan, including a coborrower, cosigner or guarantor.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

D. "Conventional mortgage rate" means the most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System, as published in statistical release H.15 or any superseding publication, as of the applicable time set forth in 12 Code of Federal Regulations, Section 1026.32(a)(1)(i).   [PL 2013, c. 464, §6 (AMD).]

E. "Conventional prepayment penalty" means any prepayment penalty or fee that may be collected or charged in a residential mortgage loan and that is authorized by law other than this section, as long as the residential mortgage loan does not have an annual percentage rate that exceeds the conventional mortgage rate by more than 2 percentage points and does not permit any prepayment fees or penalties that exceed 2% of the amount prepaid.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

F. "Creditor" has the same meaning as set forth in section 1‑301, subsection 17. For purposes of this section, "creditor" also includes an entity defined as a lender as set forth in 12 Code of Federal Regulations, Section 1024.2, including a mortgage broker.   [PL 2013, c. 464, §7 (AMD).]

F-1. "Equity share payment amount" means the settlement payment minus the payment amount.   [PL 2025, c. 653, Pt. A, §11 (NEW).]

F-2. "Equity share percentage" means the percentage portion of the value of the dwelling or residential real estate pledged by the borrower by agreement to the creditor at the time of consummation of a shared appreciation mortgage loan or later.   [PL 2025, c. 653, Pt. A, §12 (NEW).]

G. "Excluded points and fees" means, in connection with a residential mortgage loan, all bona fide fees paid to a federal or state government agency that insures payment of some portion of a residential mortgage loan plus an amount not to exceed 2% of the total loan amount attributable to bona fide discount points or a conventional prepayment penalty.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

H. "High-cost mortgage loan" means a residential mortgage loan in which the terms of the loan meet or exceed one or more of the following thresholds or a shared appreciation mortgage loan in which the terms of the loan meet or exceed the total points and fees threshold established in subparagraph (2):  

I. "Higher-priced mortgage loan" has the same meaning as set forth in the Federal Truth in Lending Act and its implementing regulation, Regulation Z, 12 Code of Federal Regulations, Section 1026.35(a). "Higher-priced mortgage loan" also includes a residential mortgage loan, except for a shared appreciation mortgage loan, that is a nontraditional mortgage as described in the "Interagency Guidance on Nontraditional Mortgage Product Risks" issued September 29, 2006 and published in 71 Federal Register, 58609 on October 4, 2006 and as updated from time to time, except that "higher-priced mortgage loan" does not include a mortgage that does not allow a borrower to defer repayment of principal or interest.   [PL 2025, c. 653, Pt. A, §14 (AMD).]

J. "Mortgage broker" has the same meaning as set forth in 12 Code of Federal Regulations, Section 1024.2, except as otherwise provided in this Article.   [PL 2013, c. 464, §8 (AMD).]

J-1. "Payment amount" means the proceeds of a shared appreciation mortgage loan that are disbursed to a borrower by a creditor or disbursed by a creditor to 3rd parties on the borrower's behalf. "Payment amount" includes the dollar value of the payments or other consideration made to a borrower by a creditor at the time of consummation of a shared appreciation mortgage loan or later.   [PL 2025, c. 653, Pt. A, §15 (NEW).]

J-2. "Payment amount percentage" means the percentage portion of the value of the dwelling or residential real estate disbursed to the borrower by agreement by the creditor at the time of consummation of a shared appreciation mortgage loan or later.   [PL 2025, c. 653, Pt. A, §16 (NEW).]

K. "Points and fees" has the same meaning as set forth in 12 Code of Federal Regulations, Section 1026.32(b)(1). In addition, "points and fees" includes:  

L. "Residential mortgage loan" means an extension of credit, including an open-end credit plan, in which:  

M. "Servicing" has the same meaning as set forth in 12 Code of Federal Regulations, Section 1024.2 and includes any other activities or responsibilities undertaken in connection with a residential mortgage loan by a person who acts as a servicer with respect to that residential mortgage loan, including collection and default management functions.   [PL 2013, c. 464, §8 (AMD).]

M-1. "Settlement payment" means the dollar amount that a borrower is expected to pay to a creditor to settle or pay off a shared appreciation mortgage loan, exclusive of any money advanced by the creditor on behalf of the borrower, subsequent to the consummation of the loan, for certain homeownership costs including, but not limited to, property taxes, insurance, owner association fees and utilities, payable by the borrower to the creditor under the terms of the shared appreciation mortgage loan.   [PL 2025, c. 653, Pt. A, §18 (NEW).]

M-2. "Term days" means the exact number of days between the settlement date of a shared appreciation mortgage loan and the settlement payment date of a shared appreciation mortgage loan or as established by rule adopted by the administrator pursuant to section 8‑504, subsection 2.   [PL 2025, c. 653, Pt. A, §19 (NEW).]

N. "Total loan amount" means the principal of a loan minus those points and fees that are included in the principal amount of the loan. For open-end loans, the total loan amount must be calculated using the total line of credit allowed under the residential mortgage loan at closing.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

A. In connection with a high-cost mortgage loan, a creditor may not directly or indirectly finance any points or fees.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

B. In addition to the limitation on balloon payments found in Regulation Z, 12 Code of Federal Regulations, Section 1026.32, a high-cost mortgage loan may not contain a scheduled payment that is more than twice as large as the average of earlier scheduled payments. This paragraph does not apply when the payment schedule is adjusted to the seasonal or irregular income of the borrower.   [PL 2013, c. 464, §9 (AMD).]

C. A creditor may not make a high-cost mortgage loan without first receiving certification from a counselor with a 3rd-party, nonprofit organization approved by the United States Department of Housing and Urban Development, a housing financing agency of this State or the Department of Professional and Financial Regulation, Bureau of Consumer Credit Protection that the borrower has received counseling on the advisability of the loan transaction.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

D. A prepayment fee or penalty may not be included in the loan documents or charged under the terms of a high-cost mortgage loan.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

A. Any person who purchases or is otherwise assigned a high-cost mortgage loan is subject to all affirmative claims and any defenses with respect to the loan that the borrower may assert against a creditor of the loan, except that this paragraph does not apply if the purchaser or assignee demonstrates by a preponderance of the evidence that it:  

B. Notwithstanding paragraph A, liability pursuant to this subsection may not accrue to a purchaser or assignee of a high-cost mortgage loan as a result of an alleged violation by a creditor of subsection 5.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

A. For purposes of this subsection, mortgage-related obligations are expected property taxes, premiums for mortgage-related insurance required by the creditor, such as insurance against loss of or damage to property or against liability arising out of the ownership or use of the property or insurance protecting the creditor against the consumer's default or other credit loss, and similar expenses.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

B. Under this subsection, a creditor must verify the consumer's repayment ability as follows.  

C. A creditor is presumed to have complied with this subsection with respect to a transaction if the creditor:  

D. Notwithstanding paragraph C, no presumption of compliance is available for a transaction for which:  

E. This subsection does not apply to a temporary or so-called "bridge" loan with a term of 12 months or less, such as a loan to purchase a new dwelling when the consumer plans to sell a current dwelling within 12 months.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

A. A shared appreciation mortgage loan may not contain a provision that prevents the borrower from renting the property to another, except that, if the rental otherwise complies with applicable federal or state law, regulation and rule, this paragraph does not prohibit:  

B. A shared appreciation mortgage loan may not contain a provision that prevents the borrower or the homeowner from refinancing an existing senior mortgage or lien through a conventional or agency so-called 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. The creditor shall agree to subordinate its interest in connection with the rate-and-term refinancing as set forth in this paragraph.   [PL 2025, c. 653, Pt. A, §20 (NEW).]

C. A shared appreciation mortgage loan may not apply a settlement payment formula that differs from the formula originally agreed upon or impose any penalties if the borrower elects to settle or otherwise terminate the shared appreciation mortgage loan before its scheduled maturity date or termination date.   [PL 2025, c. 653, Pt. A, §20 (NEW).]

D. A shared appreciation mortgage loan may not contain mandatory arbitration clauses and waivers of certain consumer rights in accordance with the prohibition found in 12 Code of Federal Regulations, Section 1026.36(h).   [PL 2025, c. 653, Pt. A, §20 (NEW).]

E. A shared appreciation mortgage loan may not include a confidentiality provision regarding the terms of the shared appreciation mortgage loan.   [PL 2025, c. 653, Pt. A, §20 (NEW).]

F. A shared appreciation mortgage loan may not contain a provision permitting the creditor to extend the term of the shared appreciation mortgage loan unless the provision requires the express written consent of the borrower to the extension, except that, and subject to the applicable statute of limitations, this paragraph may not be construed to limit or otherwise reduce the period of time in which the creditor may pursue legal action related to a borrower's failure to settle the shared appreciation mortgage loan upon the expiration of the then-current term of the shared appreciation mortgage. A creditor may unilaterally extend the term of the shared appreciation mortgage loan:  

G. A prepayment fee or penalty may not be charged under the terms of or included in the loan documents of a shared appreciation mortgage loan.   [PL 2025, c. 653, Pt. A, §20 (NEW).]

H. A shared appreciation mortgage loan may not include a demand feature that permits the creditor to accelerate the indebtedness by terminating the shared appreciation mortgage loan in advance of the original maturity date and to demand repayment of the entire outstanding balance, except in the following circumstances:  

I. A person who purchases or is otherwise assigned a shared appreciation mortgage loan is subject to all affirmative claims and any defenses with respect to the loan that the borrower may assert against a creditor of the loan.   [PL 2025, c. 653, Pt. A, §20 (NEW).]

J. A creditor may receive the settlement payment amount based only on the appraisal at settlement of the loan and may not charge additional amounts based on the condition of the property.   [PL 2025, c. 653, Pt. A, §20 (NEW).]

K. In addition to applicable requirements under federal and state law, the creditor shall disclose prior to consummation of the loan 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.   [PL 2025, c. 653, Pt. A, §20 (NEW).]

A. A shared appreciation mortgage loan must contain a provision requiring the creditor to provide to the borrower at least 90 days' advance written notice of any action required by the borrower under the terms of the shared appreciation mortgage loan that, if not timely taken by the borrower, will affect the rights or interests of the borrower, except that this paragraph does not apply to:  

B. A shared appreciation mortgage loan must provide for a periodic statement in accordance with rules adopted by the administrator.   [PL 2025, c. 653, Pt. A, §21 (NEW).]

C. A shared appreciation mortgage loan must contain a provision that, within 7 business days of a request from the borrower for information regarding the process for a final termination or settlement of the shared appreciation mortgage loan, the creditor shall provide a detailed and accurate written statement of the payoff or settlement process. If determining a settlement amount requires obtaining a 3rd-party valuation, a creditor is deemed to have complied with this paragraph by providing a written notice of an estimated total amount required to pay the shared appreciation mortgage loan in full, as of a specified date, and advising the borrower of the process and estimated cost for obtaining such 3rd-party valuation. The valuation appraisal under this paragraph must conform to the requirements of subsection 5‑C, paragraph A. The written notice of an estimated written amount must itemize and explain all known charges included in the total figure stated and estimate all charges that are subject to change.   [PL 2025, c. 653, Pt. A, §21 (NEW).]

D. Upon a consumer's default involving a real estate tax or insurance premium delinquency, if the shared appreciation mortgage loan lender elects to advance funds to cure the delinquency, the lender shall, at the consumer's request, defer repayment of the amount of the advance until settlement of the loan without the accrual of interest.   [PL 2025, c. 653, Pt. A, §21 (NEW).]

A. A creditor shall conduct shared appreciation mortgage loan valuation appraisals in a manner substantially similar to the appraisal valuation independence standards set forth in 12 Code of Federal Regulations, Section 1026.42.   [PL 2025, c. 653, Pt. A, §22 (NEW).]

B. Shared appreciation mortgage loan transaction automated valuation models are subject to substantially similar and applicable quality control standards for automated valuation models issued by the federal Consumer Financial Protection Bureau and published as 89 Federal Register, 64538, effective October 1, 2025, or by rule adopted by the administrator pursuant to section 8‑504, subsection 2.   [PL 2025, c. 653, Pt. A, §22 (NEW).]

A. 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. When the borrower or the borrower's legal counsel successfully raises the presumption that the shared appreciation mortgage loan was unconscionable, or was the result of an unfair or deceptive trade practice, by a preponderance of the evidence that the borrower did not have independent legal advice in connection with the transaction, and when the shared appreciation mortgage loan lender that benefits from the execution of the mortgage fails to rebut the presumption, the borrower or the borrower's legal counsel or personal representative is entitled to avoid the transfer or execution or the mortgage and entitled to the relief in paragraph C.   [PL 2025, c. 653, Pt. A, §26 (NEW).]

B. A civil action may be brought to obtain relief under this subsection by the borrower or the borrower's legal representative or personal representative.   [PL 2025, c. 653, Pt. A, §26 (NEW).]

C. When a court finds that a shared appreciation mortgage loan was unconscionable or the result of an unfair or deceptive trade practice under paragraph A, the court shall grant appropriate relief enabling the borrower to avoid the execution of the mortgage securing the transaction, including the rescission of the mortgage, and such other relief as the court considers proper. The court shall award reasonable attorney's fees and costs to be paid by the shared appreciation mortgage loan lender, or by any assignee of the mortgage, as found by the court. When the court finds that the shared appreciation mortgage loan's being unconscionable or the result of an unfair or deceptive trade practice in connection with the transaction is a good and valid defense to any suit to enforce the terms of the shared appreciation mortgage loan, the court shall refuse to enforce the terms of the shared appreciation mortgage loan.   [PL 2025, c. 653, Pt. A, §26 (NEW).]

A. Any person who has been found in violation of this section with regard to residential mortgage loans may be liable to the borrower for the following:  

B. A borrower may be granted injunctive, declaratory and other equitable relief that the court determines appropriate in an action to enforce compliance with this section.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

C. The right of rescission granted under 15 United States Code, Chapter 41, Subchapter I, Part A for a violation of that law is available to a borrower acting only in an individual capacity by way of recoupment as a defense against a party foreclosing on a residential mortgage loan at any time during the term of the loan. Any recoupment claim asserted pursuant to this provision is limited to amounts required to reduce or extinguish the borrower's liability under the residential mortgage loan plus amounts required to recover costs, including reasonable attorney's fees. This paragraph may not be construed to limit recoupment rights available to the borrower under any other law.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

D. The remedies provided in this subsection are not intended to be the exclusive remedies available to a borrower, nor must the borrower exhaust any administrative remedies provided under this subsection or any other applicable law before proceeding under this subsection.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

E. Any person who knowingly violates a provision of this section is guilty of a Class E crime.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

F. A creditor in a residential mortgage loan who, when acting in good faith, fails to comply with any provision of this section related to residential mortgage loans is deemed not to have violated this section if the creditor establishes that either:  

G. The remedies provided in this subsection are cumulative.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

H. Notwithstanding any other provision of law, a residential mortgage loan agreement may not include any provision that waives any borrower's remedies available at law or equity, whether acting individually or on behalf of others similarly situated, or the borrower's rights to civil discovery or appeal. Any such provision is unenforceable and void as a matter of law.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

I. Without regard to whether a borrower is acting individually or on behalf of others similarly situated, any provision of a residential mortgage loan agreement that allows a person to require a borrower to assert any claim or defense in a forum that is less convenient, more costly or more dilatory for the resolution of a dispute than a judicial forum established in this State where the borrower may otherwise properly bring a claim or defense or that limits in any way any claim or defense the borrower may have is unconscionable and void as a matter of law.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

J. It is a violation of this section for any person to attempt in bad faith to avoid the application of this section by dividing any loan transaction into separate parts or structuring a residential mortgage loan transaction as an open-end loan for the purpose of evading the provisions of this section when the loan would have been a high-cost mortgage loan if the loan had been structured as a closed-end loan or by engaging in any other subterfuge with the intent of evading any provision of this section.   [PL 2011, c. 427, Pt. A, §15 (NEW).]

K. A violation of this section constitutes a per se violation of Title 5, section 207 and of Title 14, section 6113.   [PL 2025, c. 653, Pt. A, §27 (NEW).]