Colorado Requires Home Equity Investment Firms to Follow Consumer Lending Laws
Colorado orders home equity investment firms to comply with consumer lending laws.
Why it matters: This establishes a precedent for regulating alternative home financing products, affecting legal compliance and consumer protection in real estate finance.
- On June 24, 2026, Colorado Attorney General enforced compliance on a home equity investment company.
- The company must adhere to the Colorado Uniform Consumer Credit Code (UCCC) and Consumer Equity Protection Act.
- Restitution of $390,783 will be paid to 167 consumers for violations related to finance charges.
- The settlement includes disclosure revisions, licensing requirements, and a $37,500 payment to the Attorney General's Office.
On June 24, 2026, the Colorado Attorney General announced an Assurance of Discontinuance settlement with a home equity investment company that had marketed agreements exchanging lump-sum payments for shares in future home appreciation. These agreements were found to violate the Colorado Uniform Consumer Credit Code (UCCC) and the Colorado Consumer Equity Protection Act because they failed to comply with state consumer lending laws.
The company's products, marketed as alternatives to traditional home loans, required revision to consumer disclosures and obtaining proper licenses before operations could resume in Colorado. Specifically, the settlement mandates compliance with lending laws that govern maximum rates, charges, disclosure of credit costs, and consumer remedies.
Consumers affected by prior agreements exceeding finance charge limits will receive restitution totaling approximately $390,783 across 167 consumers, with additional payments as unsettled agreements mature. Quarterly restitution reports and a potential follow-up compliance examination are also part of the settlement terms. Furthermore, the company agreed to pay $37,500 to the Colorado Attorney General's Office.
The Colorado Consumer Credit Unit enforces the UCCC, regulating various consumer credit transactions including payday loans, second mortgages, and credit cards. Until now, home equity investment agreements had largely operated outside these lending laws, representing a gap in consumer protection. This enforcement action signals tightening regulation on these non-traditional financing arrangements, prompting legal advisers and firms involved in consumer finance litigation and compliance to reassess risks and obligations under state law.
By the numbers:
- $390,783 — restitution to 167 Colorado consumers
- 167 — number of consumers affected by finance charge violations
- $37,500 — settlement payment to Colorado Attorney General's Office