Maine sets borrower protections for loans tied to home value

Lenders must follow limits on renting, refinancing, early payoff, and other contract terms. These rules cover mortgages exchanging money or other value for an interest in a home or repayment tied to its value. Loans through government agencies, government-sponsored enterprises, and Maine municipal agencies or enterprises are excluded. For rentals that follow applicable law, lenders may require customary insurance, charge fees for loans on homes the borrower does not occupy, and prohibit leases extending beyond the loan's end date. Protected refinancing cannot increase the old mortgage's unpaid balance except for customary, reasonable transaction costs. The lender must keep its claim behind the refinanced mortgage. Early payoff cannot trigger penalties or a different payoff formula. Contracts cannot require arbitration, meaning private dispute resolution, prohibited waivers of consumer rights, or secrecy about loan terms. Extensions generally require express written consent. At the term's end, lenders may extend 30 days for an unfinished settlement or termination, or a requested extension awaiting written consent. They may extend one year after at least three notices if the borrower has not responded or indicated plans to settle or terminate. These rules do not shorten the time allowed to sue over nonpayment or other failure to settle the loan at its end date, subject to applicable filing deadlines for such lawsuits under state law. The law took effect when approved on April 13, 2026.

Lenders must obtain proof of approved outside counseling, explain costs, protect home valuations, and offer three days to cancel. These protections apply to the covered home-value mortgages, excluding loans through government agencies, government-sponsored enterprises, and Maine municipal agencies or enterprises. Counseling must cover the homeowner's circumstances, loan costs and duties, and alternatives. Before signing, lenders must disclose yearly cost and payoff estimates using a home-price index set by the state regulator. Appraisals must meet independence standards, and automated home-value estimates must meet quality standards. Settlement payments must use the settlement appraisal without extra charges based on property condition. Contracts must require at least 90 days' written notice of required borrower actions affecting their rights. Exceptions cover government orders requiring action sooner and verified imminent threats to property or public health or safety. Lenders must explain the payoff process within seven business days of a request. If an outside valuation is needed, they may give an itemized estimate and explain the valuation process and estimated cost. Periodic statements follow the regulator's rules. The law took effect April 13, 2026. Counseling and required cost disclosures come before the loan agreement.

Borrowers without independent legal advice may ask a court to undo the mortgage using a presumption that the transaction was unfair or deceptive. Borrowers in covered home-value mortgages, their legal representatives, or representatives of their estates may seek relief. The government-related loan exclusions apply. The presumption applies unless an independent lawyer represented the borrower throughout the loan's preparation and mortgage signing. The borrower must establish the lack of independent advice, and the lender may overcome the presumption. If the court finds the transaction unfair or deceptive under this rule, it must provide relief allowing the borrower to undo the mortgage and award reasonable lawyer fees and court costs. A court must refuse to enforce the loan when unfairness or deception is a valid defense. Borrowers retain claims and defenses when someone else buys or takes over the loan. The law took effect April 13, 2026.

Maine treats shared-value mortgage products as consumer credit and their providers as supervised lenders. The retroactive rule covers consumer agreements secured by homes or residential land in Maine during the stated period. An agreement from the stated period is invalid and unenforceable only if it failed to comply with the state regulator's October 29, 2025 ruling. The Superintendent of Consumer Credit Protection must report findings and recommendations on these loans to the Legislature's financial services committee. The committee may submit related legislation in 2029. This part applies retroactively to October 29, 2025. The law took effect April 13, 2026. The superintendent's report is due no later than February 1, 2029.