The Massachusetts legislature just passed an economic development bill with a section that would exempt the lending practices of nonprofit lenders. Blue Hub Capitalwhich is being sued for its lending practices, consumer protection laws. This section of the bill sets a dangerous precedent, allowing BlueHub to be shielded from strict consumer protection laws and other state regulations for lending practices that are currently the subject of litigation – essentially a “get out of jail free” card.

Our political leaders now have the opportunity to demonstrate whether they stand up for consumers or powerful donors. Governor Maura Healey and Attorney General Andrea Campbell have championed consumer rights throughout their political careers, but they did not oppose this section of the legislation.

The bill exempts BlueHub, which housing advocates view as a predatory lender, from consumer protection laws. BlueHub offers split appreciation mortgages, which require homeowners to share a significant percentage of the home’s appreciation with their lender upon sale or refinancing, typically between 40% and 60% of the equity, depending on the Lincoln Institute of Land Policy. These mortgages are often marketed to financially distressed homeowners who are facing foreclosure and are in a desperate situation. SAMs typically result in huge balloon payments that push borrowers into additional financial hardship at the time of sale, refinancing, or loan maturity.

Healey, as attorney general and now governor, and Campbell, as Boston city councilor and now attorney general, have been largely absent during the many years that BlueHub homeowners have advocated to save their homes.

The more than 500 Massachusetts homeowners with BlueHub loans have consistently raised the alarm that these mortgages trap them in serious debt and financial loss. They filed numerous complaints with the attorney general’s office, led by Healey and Campbell, but received no response despite their public statements regarding holding predatory lenders accountable. NACA, a nonprofit homeownership and advocacy organization, filled the void left by their inaction and funded the homeowners’ lawsuit, giving voice to the homeowners’ complaints. In fact, NACA exposed BlueHub’s predatory practices during the 2008 mortgage crisis.

In March 2020, a class action lawsuit was filed in Suffolk Superior Court (Oates et al. against BlueHub Capital). After years of procedural delays, the owners were finally able to appear in court in September. More than 70 homeowners filled the courtroom and the judge, after reviewing the case in depth, grilled both sides with pointed questions. The slow legal process is moving forward, but BlueHub wants to bypass the legal system.

Since the lawsuit, BlueHub has pushed for legislation that protect it from any legal challenge by the owners of BlueHub. He ultimately managed to sneak Section 269 into the economic development bill, bypassing the committee process. If adopted, BlueHub could do virtually anything. The law gives him broad immunity.

This legislation would allow BlueHub Capital, and only BlueHub Capital, to falsely advertise its program; making promises to borrowers then ignoring them; charge a usurious interest rate; and indicate the cost of the mortgage and charge any amount. Borrowers would have no rights, without any legal or other recourse.

Campbell must investigate BlueHub and make clear that she opposes Section 269. In a recent appearance on GBH’s “Boston Public Radio,” she said, “We were against any industry going to the State House, including a BlueHub, and seeking to carve out an exception to our consumer protection laws. We therefore stand with our voters (…) on this issue, because no one should be exempt from our consumer protection laws. Campbell must reiterate his point of view.

Healey is expected to veto S. 269, which is opposed by his own Office of Economic Development. Legal Services of Greater Boston, the National Consumer Law Center and other consumer advocates strongly oppose this dangerous legislation, warning that it “opens the door to predatory and abusive lending practices without recourse from the share of the owners. The Massachusetts Mortgage Bankers Association, which represents approximately 180 Massachusetts mortgage lenders, condemns the legislation and urges that “these (shared appreciation) mortgage products be subject to the same strict regulations as other mortgage products to adequately protect consumers.” .

BlueHub has already generated $23 million from homeowners through May 2022 and would get another $37 million from homeowners’ equity and more through high interest rates of around 8% and other fees. If it were legal, why introduce this section on immunity into an important and widely popular bill?

No entity should be exempt from laws and regulations that protect consumers and ensure fairness and transparency.

Bruce Marks is the founder and CEO of NACA, the nation’s largest homeownership and advocacy nonprofit organization.