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Bill

SB 1402

An Act amending Title 7 (Banks and Banking) of the Pennsylvania Consolidated Statutes, providing for licensing and regulation of shared equity providers and shared equity agreements; imposing duties on the Department of Banking and Securities; and imposing penalties.

2025-2026 Regular Session Introduced by Maria Collett and 8 co-sponsors

Creates a formal regulatory framework licensing, disclosures, counseling, and enforcement to protect homeowners in shared equity agreements.

Referred to Banking & Insurance
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WeVote Research Nonpartisan
Bill Summary · SB 1402

Summary of Bill: SB 1402 (2025-2026, Pennsylvania)

Primary purpose and intent

  • Establishes a new regulatory framework in Pennsylvania for licensing, oversight, and enforcement of shared equity providers and shared equity agreements relating to residential property.
  • Creates a dedicated Chapter 63 within Title 7 (Banks and Banking) to govern the lifecycle of shared equity activities, including licensing, disclosure, consumer protections, enforcement, and penalties.
  • Aims to protect homeowners by imposing clear standards, required disclosures, counseling, and oversight similar in spirit to mortgage and real estate settlement protections.

Key provisions and changes

Subchapter A — Preliminary provisions

  • Sets the scope: licensing and regulation of shared equity providers and agreements.
  • Defines key terms (e.g., homeowner, starting/ending home value and equity, transaction amount, settlement payment, shared equity agreement, and control persons).
  • Introduces the concept of a “shared equity agreement” as a nonrecourse transaction where a provider funds a homeowner and obtains a mortgage lien plus an equity interest or a future payment tied to home value, excluding reverse mortgages.

Subchapter B — Licensing and administration

  • Licensing requirement: Generally, entities must be licensed to make or service shared equity agreements; exemptions apply for certain financial institutions (banks, credit unions, insurance companies, interstate entities, affiliates, etc.) and individuals acting under supervision.
  • Application process: Detailed application content, background checks, fingerprints, and potential State/National criminal history checks; initial application fee of $5,000 plus an investigation fee.
  • Multistate licensing: Department may participate in the Conference of State Bank Supervisors’ multistate licensing system; fees may be paid directly to the system.
  • Privacy and security: Department must ensure privacy and data security in any multistate system.
  • Issuance/denial: Criteria for license issuance; 60-day timeframe for action after a complete application; appeal procedures.
  • Renewal: Annual license renewal with fees up to $2,500; conditions for renewal; potential use of multistate system for renewals.
  • Changes: Licensees must notify the department of material changes within specified timelines.
  • Department duties: Examinations, hearings, information requests, rulemaking, enforcement tools, restitution orders, cease-and-desist powers, and reporting to multistate system if applicable.
  • Annual reporting: Department must publish annual reports on licensee compliance to the Banking and Insurance Committee (Senate) and Commerce Committee (House).

Subchapter C — Shared equity agreements

  • Requirements for entering into a shared equity agreement:

    • Homeowner rescission rights: At least three business days to rescind after acceptance.
    • Starting equity threshold: Starting homeowner equity must be at least 10% (with adjustments if paying down existing debt).
    • Appraisal standards: Use of appraisal/valuation reports compliant with USPAP; homeowner must receive copies.
    • Disclosures: Disclosures required; disclosures must show the maximum amount payable, trigger conditions for settlement payments, and that the homeowner remains responsible for other mortgage and carrying costs.
    • Counseling: Homeowner must complete counseling (HUD-approved or by department-authorized counselor) on costs, affordability, and risks; counseling must be documented.
    • Vendor evaluation: Providers must assess homeowner’s ability to meet financial obligations and determine sustainability of the agreement; providers must avoid entering into agreements if income is insufficient.
    • Required disclosures and independent appraisals: Appraisals must be performed by licensed/certified appraisers not affiliated with the provider; cost disclosures and documentation requirements.
    • Onboarding access: Homeowner must have access to a knowledgeable provider representative at execution.
    • Compliance with disclosures: Provider must adhere to the disclosure requirements in 6322.

  • Disclosure requirements (6322):

    • Initial disclosure within three business days of inquiry; outlines lien, risk of losing property, and counsel recommendation.
    • Final disclosure at least 30 business days before the agreement becomes binding; enumerates maximum payment, settlement mechanics, ongoing costs, counseling, cancellation rights, transaction and settlement amount as percentages of property value, and required documents.

  • Additional protective provisions (6323):

    • Duties to provide long lead times for notices of actions, payoff quotes, termination processes, and cost-adjustment protections.
    • Credit for homeowner improvements and appraisal-based adjustments for maintenance/improvements.
    • Authority to enforce agreements in court, including foreclosure pathway aligned with mortgage procedures.
    • Prepayment rights: Agreements entered on or after effective date may be prepaid without penalties.
    • Prohibition on confession of judgment in certain forms, with procedural safeguards.

  • Prohibited terms and practices (6324):

    • Prohibits penalties for early settlement, risk-adjusted appreciation, rental restrictions, conflicting valuations, arbitration clauses, confession-of-judgment provisions, POAs to sell, jury trial waivers, and certain refinancing prohibitions.
    • Caps on settlement timing and fees, and limits on certain fees and terms.

Subchapter D — Enforcement

  • Departmental disciplinary powers: Suspension, revocation, or refusal of licenses for misconduct or noncompliance.
  • Reinstatement standards after corrective action.
  • Penalties: Up to $10,000 per offense for unlicensed entities or licensees violating provisions.
  • Homeowner remedies: Civil actions for damages (including punitive damages), treble damages for excess settlement payments or charges, and recovery of costs and attorney fees.
  • Construction: Rights preserved to pursue other federal/state legal remedies.

Subchapter E — Miscellaneous provisions

  • Temporary moratorium: Initial prohibition on offering shared equity agreements before Subchapter C takes effect; permits enforcement of preexisting lawful agreements.
  • Regulations: Department authority to promulgate necessary regulations.

Affected parties and scope

  • Shared equity providers: Must obtain and maintain licenses, comply with disclosures, counseling, and protective provisions; subject to enforcement and penalties.
  • Homeowners (residential property owners): Protected through mandatory disclosures, counseling, appraisal standards, cure rights, and remedies for violations.
  • Financial institutions and certain instrumentality entities: Exemptions from licensing for typical banks, credit unions, insurance companies, and other regulated entities.
  • Department of Banking and Securities (and its Commission): Primary regulator implementing licensing, examinations, enforcement, and rulemaking; participates in multistate licensing as applicable.
  • General public/consumers: Potentially enhanced protections and remedies in disputes over shared equity agreements.

Procedural and timeline aspects

  • Effective dates:
    • Subchapters A and E effective immediately.
    • Subchapter B (licensing) takes effect 180 days after enactment.
    • Remainder of act becomes effective 60 days after enactment.
  • Licensing process timeline: Department must act within 60 days of a completed application (issuance or denial).
  • Renewal: Licenses expire annually and require renewal with up to a $2,500 renewal fee.
  • Disclosure timeline: Final disclosures due at least 30 business days before agreement binding; initial disclosures due within 3 business days of inquiry.
  • Notice and cure: Defaults require at least 30 days’ notice; cure windows and processes outlined, with defined cure methods and costs.
  • Data/reporting: Annual compliance reports due to legislative committees starting within 12 months of effective date and annually thereafter.

Potential impact

  • Creates a formal regulatory framework for shared equity products, aligning them with consumer protection standards in mortgage and real estate finance.
  • Likely raises compliance costs for providers (licensing, disclosures, counseling, appraisals, ongoing reporting).
  • Provides homeowners with stronger transparency, right to rescind, and remedies against improper practices.
  • Establishes enforcement mechanisms and potential penalties to deter noncompliant behavior.
  • Encourages uniform standards via potential multistate licensing participation.

Compiled from official sources — confirm details with the bill’s official record.

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