- Regulators in Massachusetts, Pennsylvania, and Maine are moving to classify home equity investments (HEIs) as mortgages — which would subject them to interest rate caps, counseling requirements, and standardized disclosures.
- A Washington state court ruled that Unison's equity-sharing agreement met the definition of a reverse mortgage. The opinion is citable precedent.
- Point, a Palo Alto HEI provider, offered $50 Amazon gift cards to customers who submitted anti-regulation testimony to Pennsylvania lawmakers. Bipartisan criticism followed.
- Despite legal headwinds, billions in institutional capital continue flowing into the space — Blue Owl committed $2B to Point and Splitero completed a $283M securitization.
- Homeowners weighing an HEI should understand total cost, compare to HELOCs at current ~7% rates, and get independent advice before signing.
Three states. Two lawsuits. One big question: are home equity investments actually loans?
Home equity investments (HEIs) — also called shared appreciation agreements or home equity agreements — let homeowners access a lump sum of cash in exchange for a share of their home's future value. No monthly payments. No interest rate. Sounds simple. But regulators in Massachusetts, Pennsylvania, Washington, and several other states are pushing back hard, arguing these products function like reverse mortgages and should be regulated as such.
If you're considering an HEI — or already have one — the regulatory landscape is shifting fast. Here's what's happening state by state, what it means for homeowners, and how to protect yourself.
State-by-State HEI Regulation Tracker
| State | Status | Details |
|---|---|---|
| Massachusetts | Active Lawsuit | AG sued Hometap (Feb 2025). Court blocked key defenses (Dec 2025). Hometap exited the state. |
| Pennsylvania | Legislation Pending | HB 2120 would classify HEIs as residential mortgages. Gift card testimony controversy (Mar 2026). |
| Washington | Court Ruling | 9th Circuit ruled Unison's agreement = reverse mortgage (Aug 2025). Settled Oct 2025. |
| Connecticut | Enacted | Already classifies HEI products as mortgages under existing lending laws. |
| Maryland | Enacted | Already classifies HEI products as mortgages under existing lending laws. |
| Maine | Under Review | LD 1901 considered restrictions that industry groups said amounted to a de facto ban. |
What Is an HEI, and Why Are Regulators Concerned?
A home equity investment works differently from a HELOC (home equity line of credit) or a traditional home equity loan. Instead of borrowing money and paying it back with interest, you sell a percentage of your home's future value to an investor. You get cash upfront. The investor gets paid when you sell, refinance, or reach the end of your contract — typically 10 to 30 years.
HEI providers like Hometap, Point, Unlock, and Unison market these agreements as "debt-free cash" — no monthly payments, no interest charges, no impact on your debt-to-income ratio. For homeowners who are equity-rich but cash-tight, especially in a high-rate environment where HELOCs average around 7.04% (Bankrate, March 25, 2026), the appeal is real.
But regulators see a problem. Because HEIs are not classified as loans in most states, they aren't subject to the consumer protections that govern mortgages — things like mandatory counseling, cooling-off periods, interest rate caps, and standardized disclosures. The Consumer Financial Protection Bureau flagged this gap in a January 2025 report, warning that HEI contracts can be difficult to understand and expensive compared to other home-secured financing.
HEI providers say their products are investments, not loans. Regulators say they function like reverse mortgages and belong under existing consumer protection laws. That classification question is at the center of every lawsuit and bill described below.
Massachusetts: The AG's Lawsuit Against Hometap
The highest-profile HEI legal battle is playing out in Massachusetts, where Attorney General Andrea Joy Campbell sued Hometap Equity Partners in February 2025.
The lawsuit alleges that Hometap "pervasively and systematically violated the state's consumer protection laws" by marketing an unlawful reverse mortgage as a novel investment product (Mass.gov, February 2025). Under Massachusetts law, reverse mortgages can only be offered to borrowers over age 60, require a seven-day cancellation period, and mandate third-party counseling. The AG argues Hometap sidestepped all of those protections.
The core claim: Hometap takes an equity stake up to twice the size of what it pays out, and homeowners must "repurchase" that stake at full value within 10 years — or risk losing their home.
Hometap has pushed back, calling the lawsuit "unfounded" and "meritless." The company argued that Massachusetts regulators had been aware of its business model since 2018 without raising concerns. But in a December 2025 ruling, a Suffolk County Superior Court judge blocked Hometap from using prior regulatory contact as a legal defense (HousingWire, December 2025). The case is proceeding.
Since the lawsuit, Hometap has quietly removed Massachusetts from its list of operating states.
Pennsylvania: The Gift Card Controversy and House Bill 2120
Pennsylvania's approach to HEI regulation made national headlines in March 2026 — but not for the policy itself.
Spotlight PA reported that Point, a Palo Alto-based HEI provider, offered $50 Amazon gift cards to customers who submitted testimony opposing proposed HEI regulation to the Pennsylvania House Commerce Committee (Spotlight PA, March 2026). Of the 23 citizen emails opposing the bill that were included in the committee testimony packet, 10 directly quoted templates provided in Point's email. Point's deputy general counsel confirmed the payments, saying they were a way to quickly collect customer stories.
State Rep. Arvind Venkat (D., Allegheny), the bill's sponsor, called the practice an "outrageous corruption of our legislative process." Co-sponsor Rep. Tim Twardzik (R., Schuylkill) described it as "pay to play."
The underlying bill — House Bill 2120 — would classify shared equity contracts as residential mortgages under Pennsylvania's Loan Interest and Protection Law (Real Estate News, February 2026). If passed, HEI providers would face the same interest rate caps, licensing requirements, and consumer protections that apply to traditional mortgage lending.
Washington State: The Unison Ruling That Changed Everything
Before Massachusetts and Pennsylvania, Washington set the legal precedent.
In August 2025, a three-judge panel on the Ninth Circuit Court of Appeals ruled that Unison's shared equity agreement met the definition of a reverse mortgage under Washington's Consumer Loan Act. The ruling reversed a lower court decision that had favored Unison.
The court found that the "entire structure" of Unison's agreement was designed to put the company in the same position as a lender holding a reverse mortgage — receiving a share of equity secured by a deed of trust, with the homeowner required to repay at the end of the term.
Based on allegations in a California lawsuit (HousingWire, March 2026). Your actual results with an HEI will vary based on your agreement terms and your home's appreciation. This example illustrates why regulators are concerned — not that all HEIs produce this outcome.
Unison settled the case in October 2025. While the settlement included a procedural move to vacate the judgment, the court's written opinion remains on record and can be cited in future cases. That opinion has already been referenced in lawsuits filed in Colorado, New York, and California.
Despite Legal Pressure, Investor Money Keeps Flowing
Here's the counterpoint that complicates the regulatory picture: venture capital and institutional money continues pouring into the HEI space.
Hometap raised $50 million led by Gallatin Point Capital. Total HEI securitization volume is growing, with over $2.5 billion securitized in 2025 alone. That capital is fueling origination growth even as legal challenges mount.
For homeowners, this creates a mixed signal. More capital means more options and potentially better terms. But it also means aggressive growth in a product category where consumer protections are still catching up. The financial incentives for providers to originate agreements are high — which is exactly why regulators are paying attention.
What Homeowners Should Do Before Signing an HEI
| Feature | HEI | HELOC |
|---|---|---|
| Monthly payments | None | Yes (interest-only or P&I) |
| Interest rate | None (appreciation share) | ~7.04% avg variable |
| Total cost predictability | Low — tied to home value | Medium — rate can change |
| Upfront fees | 4–5% origination | Often $0 (no-closing-cost) |
| Qualification | Equity-based (easier) | Credit + income required |
| Regulatory status | Evolving — lawsuits pending | Established — mortgage laws |
Frequently Asked Questions
The Bottom Line
Home equity investments are facing their most serious regulatory challenge since the product category emerged in the mid-2010s. Lawsuits in Massachusetts and California, legislation in Pennsylvania and Maine, and court rulings in Washington have all pushed toward the same conclusion: these products share enough DNA with reverse mortgages that they deserve comparable oversight.
That doesn't mean HEIs are going away. Billions in institutional capital says otherwise. But the era of HEI providers operating largely outside of lending regulations is closing — state by state, courtroom by courtroom.
If you're a homeowner weighing your equity options, the takeaway is simple: do the math on total cost, read the contract in full, and don't sign anything without understanding what happens at the end of the term. Whether regulators finish building the guardrails or not, you can build your own.
