Home Equity “Sharing” Agreements (HESA) go by many names, like “shared appreciation agreements” or “home equity investment options.” Unlike traditional mortgages, HESAs are unregulated, deceptive, and predatory contracts that are not secured by the protections homeowners expect to come with their mortgage.
These agreements mislead consumers into thinking they are taking out a loan, rather than selling their home equity. Homeowners count on using their home equity to buy a new house, pay for end-of-life care, or fund retirement, but find themselves trapped in a downward spiral that often results in bankruptcy, foreclosure and eviction.
These predatory contracts prevent homeowners from refinancing and making home improvements while balloon payments leave homeowners owing far more than they originally received. This is a rapidly-expanding, Wall Street-backed, multi-billion dollar industry very similar to the subprime mortgage crisis.
ESSB 5968 is common-sense legislation that will protect Washington homeowners by bringing HESA contracts under the definition of a mortgage loan to ensure the same protections as traditional mortgages.
This bill doesn't change our understanding of what a mortgage loan is, but simply brings products that walk, talk, and act like mortgages under the protection we already extend to homeowners in our state.
This bill has a hearing tomorrow, February 20, and has to pass out of committee by the end of the day on Wednesday, February 21. Tell your representatives to support this common-sense legislation to protect consumers in our state from abusive lending practices!
