Gov. Maura Healey talks to reporters after speaking at the Retailers Association of Massachusetts annual meeting in Waltham on Wednesday, Nov. 20, 2024. Photo by Sam Drysdale | State House News Service
Gov. Maura Healey’s decision to not veto legislation that shields a Boston non-bank lender being sued by its borrowers is being blasted by the lawyer in the case.
Language in the new state economic development bond bill shields lenders like Boston-based BlueHub Capital that provide “shared appreciation mortgages” from lawsuits. Also, it exempts these mortgages from oversight whether it be from the attorney general’s office or other regulatory bodies. Most Massachusetts mortgage lenders do not offer this type of mortgage product.
Jeffrey Wiesner, who represents the plaintiffs in the case against BlueHub, believes that consumers are being hurt by shielding lenders from legal battles.
“We think the provision in the Economic Development Bill that gives Bluehub Capital broad immunity from the consumer protection statutes is extraordinary and frankly outrageous,” he said. “Consumer protection statutes, particularly those that specifically apply to mortgage financing, have been refined over decades to protect consumers entering into what is likely the largest financial transaction of their lives. No entity should be granted immunity from those protections – especially one that is in the middle of litigation for alleged violations of those very statutes.”
A shared appreciation mortgage is a lending product typically offered to homeowners facing foreclosure and financial distress. Under such an agreement, a homeowner agrees to give a lender or entity a share of any increase in the value of their home. Depending on how the property value changes over time, the lender’s share might exceed the balance owed on the loan. The consumer agrees to forfeit a portion of future gains, which the lender collects when the loan is repaid, either through the sale of the home or if the consumer opts to refinance the mortgage.
Wiesner’s clients are suing BlueHub claiming the details of the mortgage were never adequately explained to them and they had no lawyer at closing.
Protestor Confronts Healey
A protestor reportedly confronted Healey about the bill at a Waltham event Wednesday, urging her to veto the BlueHub section.
The section was an amendment to the economic development bill sponsored by state Sen. Paul Feeney. The Massachusetts Mortgage Bankers Association had lobbied lawmakers against the measure.
“I was your attorney general,” she told her audience after the protester was escorted out. “I went after the subprime predatory lenders. I’m pretty well-schooled in this. And we took them on and took them down. So I probably, more than anybody, know what it means to stand up for homeowners and fight predatory lending.”
Healey has longstanding ties to BlueHub CEO Elyse Cherry. She told reporters Wednesday that she had not spoken with Cherry about this section of the bill.
A spokesperson for the lender said it believes that these mortgages promote more good than critics suggest. The company says that its BlueHub SUN product has put more than $65 million in home equity back into homeowners’ pockets, with $45 million in Massachusetts alone. Without its shared appreciation product, BlueHub said these borrowers would have lost their homes due to foreclosure.
BlueHub said it has provided 558 loans to families across the state and said on overage that homeowners save $734 per month on their mortgage payment and their mortgage principals are reduced by an average of $91,000, or 31 percent.
“Passage of this legislation will mean that families in Massachusetts facing foreclosure will continue to have the chance of saving their homes and building long term equity and generational wealth,” BlueHub Capital said in a statement. “This new law will ensure that non-profit foreclosure relief programs like BlueHub SUN remain accessible to families who are facing imminent danger of losing their homes.”
State House News Service staff writer Sam Drysdale contributed to this report.
