On June 24, Colorado’s attorney general (AG) announced the entry of an assurance of discontinuance (AOD) with a home equity agreement provider requiring it to comply with the Uniform Consumer Credit Code (UCCC) and provide restitution to Colorado homeowners who allegedly entered into its home equity agreements and paid finance charges in excess of Colorado’s rate caps. The AG alleged that the provider marketed home equity agreements in which consumers received a lump-sum payment in exchange for a percentage interest in the home’s future value, regardless of whether the home increased or decreased in value. According to the AOD, the AG found that the agreements constitute consumer credit transactions under state law and, therefore, must comply with the UCCC, including the state’s Consumer Equity Protection Act, applicable rate caps, required disclosures, and licensing obligations.

The AOD requires the provider to: (i) comply with the UCCC, including by counting origination fees in loan finance charge calculations; (ii) provide disclosures stating that maximum total loan finance charges are governed by the Colorado UCCC and will not exceed amounts permitted by the Colorado UCCC; (iii) obtain required state licenses, including a supervised lender license, before resuming operations; and (iv) make restitution payments directly to consumers, with additional payments required as more transactions settle. The AG said the provider had identified $390,783 in restitution owed to 167 Colorado consumers based on loans closed to date, and said the figure is expected to grow as additional loans close. The AOD also requires the provider to submit written reports every three months for outstanding transactions and to pay $37,500 to the state AG’s office.