Elyse Cherry spoke during a conference in Somerville last year. Cherry is the chief executive of BlueHub Capital.NATHAN KLIMA FOR THE BOSTON GLOBE

State lawmakers this week sent Governor Maura Healey legislation that would shield a Boston nonprofit battling accusations of predatory lending from lawsuits, and, critics say, exempt it from the state’s consumer protection laws, alarming homeowners and Massachusetts’ top prosecutor alike.

The Legislature included the proposal among hundreds of policy riders it tacked onto a nearly $4 billion economic development bill that passed both the House and Senate on Thursday. Without specifically mentioning it, the measure stands to benefit BlueHub Capital, a Roxbury-based nonprofit that specializes in helping distressed homeowners but which, some claim in a nearly five-year-old legal fight, also deceived them.

Attorneys and groups who helped sue BlueHub Capital in 2020 — alleging it engaged in “predatory lending” — on Friday urged Healey to veto the language, which one called a “get-out-of-jail-free card” for the nonprofit.

“This is the epitome of corruption,” said Bruce Marks, chief executive of Jamaica Plain-based Neighborhood Assistance Corporation of America, which has helped finance the lawsuit against BlueHub. “This is not just about lending. If this is able to fly, this says that any entity or individual using their money and inside influence can buy immunity from any regulation or law.”

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Under its BlueHub SUN program, BlueHub buys properties from banks that are foreclosing on homeowners, then resells them to the original owners. As part of the deal, the homeowners also take on a so-called shared appreciation mortgage that entitles BlueHub to a portion of any increase in the home’s value when the homeowner sells or refinances the property.

The language passed Thursday would codify the use of shared appreciation mortgages into law, and states that lenders would not be liable “for monetary relief, injunctive relief or other equitable relief at common law or by statute” as long as it gives a homeowner “full disclosure” of any shared appreciation requirement.

Senator Paul Feeney, a Foxborough Democrat and the measure’s co-sponsor, defended the proposal as “smart policy” that codifies policies that help “keep families in their homes.” He said it includes “rigorous” protections for consumers, disclosure mandates, and the ability for Attorney General Andrea J. Campbell to craft regulations around it.

“Our focus must be on working class people, caught in a widening wealth gap in this country, facing serious hardships and on the brink of losing their home and quite frankly, their hope, to a bank,” he said in a statement.

The proposal’s passage, however, didn’t alarm only the lawsuit’s plaintiffs, but also Campbell herself, who in September told GBH News she was troubled by the measure, and reiterated that in a statement to the Globe on Friday.

A 2022 protest organized by NACA outside BlueHub’s headquarters in Roxbury. JONATHAN WIGGS/GLOBE STAFF

“I continue to have serious consumer protection concerns with this language, including giving an exemption to any industry from our consumer protection laws,” she said.

The measure popped up in July, as one of a bundle of amendments added to the Senate’s version of the economic development bill without taking a roll call vote. It then survived a months-long negotiation between House and Senate leaders before lawmakers whisked the 319-page bill to Healey’s desk on Thursday.

Aides to Healey said Friday that she was reviewing the legislation. She has until Nov. 24 to sign the bill, according to the governor’s office, and has the ability to veto parts of it.

Healey also has a personal connection to BlueHub’s longtime chief executive, Elyse Cherry The two have known each other for decades, and Cherry has helped raise money on Healey’s behalf. In a Boston Business Journal story last year recognizing Cherry, Healey called her “trailblazer in so many ways,” and lauded Cherry’s work on LGBTQ issues, community development, and affordable housing.

Healey’s office did not address a question of whether her relationship with Cherry would impact how she handles the legislation.

BlueHub, in a statement, said that its shared appreciation mortgage program has helped 558 families across the state stay in their homes, and that the group advocated for the legislation to ensure its program and others like it “remain accessible to families who are facing imminent danger of losing their homes.” The nonprofit said, on average, the program saves participating homeowners $734 per month on their mortgage.

“We appreciate the sponsors of this amendment and members of the Conference Committee for including this critical initiative in the final version of the economic development legislation,” the non-profit’s statement said. “This legislation will ensure that foreclosure relief programs like BlueHub SUN remain accessible to families who are facing imminent danger of losing their homes.”

The nonprofit added that the legislation “is needed regardless of the outcome of the litigation,” which it declined to comment on, given it’s still pending in Suffolk Superior Court. “We are confident that we acted in accordance with the law at all times,” its statement said.

Bruce Marks is CEO of Neighborhood Assistance Corporation of America, which is funding a lawsuit against BlueHub Capital for what NACA says is predatory lending to people facing foreclosure.CRAIG F. WALKER/GLOBE STAFF/THE BOSTON GLOBE

According to the lawsuit, dozens of people who borrowed from what was then known as Boston Community Capital said they discovered belatedly that they had agreed to a shared appreciation mortgage, under which they agree to share any increase in their home’s value with the lender.

The borrowers said they had no lawyer at the closing and no one adequately explained the “shared appreciation” agreement, which included a requirement that they not talk about the terms of the deal, according to the lawsuit.

It’s not the first time lawmakers have tried to use a big legislative package to push through the language. A similar amendment surfaced in the House in 2022, and again this past spring during the House’s debate over a sweeping housing bill, though it never reached the governor.

Jeffrey Wiesner, a partner at the law firm Wiesner McKinnon LLP who is representing the homeowners in the lawsuit, said Friday that the amendment adds insult to injury for the plaintiffs, and that it sets a dangerous precedent.

Numerous state and national groups, including the Massachusetts Mortgage Bankers Association and the National Consumer Law Center, have written letters opposing prior iterations of the amendment because the policy gives BlueHub immunity from consumer protection and complex mortgage regulations, he said.

Ultimately, Wiesner said, Healey should veto the amendment.

“The only reason for this legislation is to give one entity immunity from consumer protection laws that ensure consumers in this state are not taken advantage of,” he said. “If they were so confident that they were in the right, why are they asking the Legislature for legal protection?”

Article Link: https: https://www.bostonglobe.com/2024/11/15/metro/bluehub-capital-massachusetts-legislature-economic-development-bill/