Home equity investment firms unite amid regulation shift

Home equity investment platforms formed a new collective as they look for a say in establishing regulations, while secondary market investment looks set to drive growth for the burgeoning segment, according to a new report.

The Coalition for Home Equity Partnership, including HEI platforms Hometap, Point Finance and Unlock Technologies, launched earlier this year, with aims of setting a framework for future industry growth. 

"Good regulation enables growth," said Josh Gaffney, general counsel for Hometap, the company that published the report. "It gives investors confidence, keeps out bad actors, and ensures that consumers feel confident in these products — whether they come from us or a competitor."

Home equity investment agreements offer consumers the opportunity to obtain cash through a draw on their property's equity. Unlike lines of credit or closed-end second liens, the products typically come with no monthly payment obligation nor accrue interest. Instead, upon the end of the contract term, the homeowner owes an amount equal to the share of home value agreed upon at initial signing. HEI contracts also go by other names, such as shared appreciation agreements. 

The establishment of CHEP comes as the platforms face growing scrutiny from regulators and lawsuits against multiple providers. At the center of several cases as well as a 2024 journalistic investigation was Easyknock, a company that abruptly and mysteriously went out of business at the end of last year. 

Pressure has come from various sources to apply the same regulations on HEI platforms that the mortgage industry must observe. Mortgage companies are required to provide a full set of disclosures to customers mandated by the Truth in Lending Act. 

Plaintiffs in the lawsuits claimed that they felt misled by marketing and did not fully understand the terms of their shared appreciation agreements, leading to severe financial consequences, including foreclosure in some cases. HEI platforms, though, say the comparison to mortgages is not apt. 

"You can't simply call these products loans because the core requirements of lending regulation don't make sense when applied to HEIs," Gaffney said. 

"There's no interest rate to disclose, no ongoing payments, and the cost to settle depends on factors like home price appreciation and how long the funds are held," he added.

Instead, CHEP is looking to work directly with state lawmakers to protect customers, as more look to introduce their own rules specifically governing HEI platforms. The consortium also said it "advocates for policies that protect homeowners and ensure they fully understand their financial options." 

The collective this week offered its support to a recently introduced bill in Washington State, praising the clarity and structure provided and calling it a "positive development for the shared equity industry."

The growth of the HEI segment comes as it gains more interest in secondary markets, Hometap's report also said. Institutional capital from a range of business types look set to boost issuances of home equity investment securitizations. 

While secondary market interest for HEI-backed investments previously came from the likes of hedge funds, 2024 saw banks, insurance companies, pension funds and asset managers step in to provide momentum for the niche.  

"This isn't just about new investors — it's about HEIs maturing into a repeatable, scalable asset class that both investors and service providers now understand," said Hometap's vice president of capital markets Andrew Vassallo.

In 2024, Hometap issued its first securitization investment opportunities, joining peer businesses, including Point and Unison, in the market.

A pivotal point came in 2023 when Morningstar DBRS, later followed by Kroll Bond Rating Agency, developed rating methodologies for HEI products. 

"Rated deals opened doors to institutional investment by offering transparent risk assessments and validating HEIs as a credible asset class," Vassalo said.

Technology is also advancing to enable more secondary market issuances, with development in due diligence, serving and verification now able to support broker dealers work with specific characteristics home equity investments possess, the report also stated. 

The outlook for growth arrives at the same time forecasts for mortgage rates see them remaining near current levels, thus diminishing cash-out refinance incentive for most homeowners. Analysis from Redfin in summer 2025 found more than 85% of homeowners with mortgage rates below 5%. Average 30-year fixed rates have ranged between 6% and 8% since the latter half of 2023 and currently sit at 6.95%, according to Freddie Mac. 

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