Press Release: 2025-02-21 00:00:00
AG Campbell Files Nation-Leading State Enforcement Action Against Home Equity Investment Company, Alleging Violations Of Consumer Protections, Mortgage Laws
Lawsuit Filed Against Boston-Based Hometap Alleges Company Stripped Vulnerable Homeowners’ Equity, Putting Them at Unreasonably High Risk of Losing Their Homes
FOR IMMEDIATE RELEASE:
2/20/2025
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Sabrina Zafar , Deputy Press Secretary
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Call Sabrina Zafar , Deputy Press Secretary at (617) 727-2543
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Email Sabrina Zafar , Deputy Press Secretary at Sabrina.Zafar2@mass.gov
BOSTON — Attorney General Andrea Joy Campbell has filed a lawsuit in Suffolk County Superior Court against Hometap Equity Partners, LLC and HomeTap Management Holdings, LLC (collectively, “Hometap”), a Boston-based home equity investment (HEI) company founded in 2018. The lawsuit alleges that Hometap pervasively and systematically violated the state’s consumer protection laws, including mortgage and foreclosure prevention laws, putting financially vulnerable homeowners at high risk of losing their homes.
The lawsuit alleges that Hometap engaged in unlawful and predatory practices that targeted financially vulnerable homeowners for profit. Specifically, the AGO alleges that Hometap unfairly put consumers at an unreasonably high risk of foreclosure and financial harm by collecting unlawfully high interest; making mortgage loans without adequate financial assessments or underwriting; offering illegal reverse mortgages that fail to comply with state consumer protection laws; and deceptively concealing the high cost and nature of the HEI product.
“Amidst a growing affordability crisis, our lawsuit alleges that Hometap deliberately preyed upon financially vulnerable homeowners for profit, stripping them of their hard-earned home equity and putting them at unreasonably high risk of foreclosure,” said AG Campbell. “Our lawsuit seeks to not only hold Hometap accountable for its unlawful practices, but also put other companies on notice that my office will continually seek to protect communities from predatory business practices.”
Unlawfully High Interest
Hometap’s HEI product typically operates as a ten-year contract, providing consumers a one-time cash payment in exchange for a percentage of their home equity. The AGO alleges that a core feature of Hometap’s product is a devaluation of homeowners’ equity, as Hometap often pays homeowners as little as half the value of the equity it takes.
Inadequate Financial Assessments or Underwriting
The AGO alleges that Hometap offers upfront “fast cash” to consumers without assessing financial factors such as income, employment, and assets other than their home. The AGO asserts that Hometap deliberately markets its product to “house rich, cash poor” homeowners that have substantial home equity but insufficient income or other assets, including the elderly, retirees, those with low credit scores, and those with unpaid credit cards, student loans, or other debt. According to the AGO, Hometap’s practices not only strip consumers of their hard-earned home equity, but given the financial vulnerability of many Hometap consumers, will also lead to consumers being unable to pay the large payment required by Hometap at the end of their contract, putting them at an unreasonably high risk of losing their homes through a foreclosure or forced sale.
Illegal Reverse Mortgages
Although Hometap claims that its HEI is an “investment” instead of a loan, the AGO asserts that Hometap’s HEI is actually an unlawful reverse mortgage loan. A reverse mortgage is one or more advances of money secured only by a borrower’s primary residence, based on the property’s equity or future appreciation, that does not require any payments until the loan becomes due, all of which the AGO asserts are features of Hometap’s HEI.
The AGO alleges that Hometap’s HEI wholly fails to comply with state requirements intended to protect borrowers of these loans. Such requirements include, among other protections, that reverse mortgage loans only be made to borrowers who are over 60 years old, include a seven-day cancellation period, and require borrowers to receive third-party counseling to ensure they understand the terms of their loan. The AGO asserts that Hometap’s conduct deprives consumers of important protections against losing their homes, because the only lawful reverse mortgage loans available in the Commonwealth become due only when a borrower moves out, sells the home, defaults, or dies.
Deceptive Marketing Materials
The AGO also alleges that Hometap pervasively obscured its devaluation of homeowners’ equity throughout its marketing materials by claiming that it “invests alongside consumers” and does not charge interest, leading consumers to believe that Hometap primarily profits from home appreciation. The AGO asserts that the product is actually far more costly to homeowners than its marketing suggests.
Per a hypothetical example from the complaint, as a result of Hometap’s alleged deceptive practices, a consumer might be led to believe that an offered $100,000 cash “investment” would cost them around $155,000 with appreciation and a 3% “Hometap fee.” In reality, the true cost of the HEI, if the home appreciates consistent with historical trends, would be more than $311,000.
Hometap’s alleged conduct impacts hundreds of Massachusetts homeowners with both active and settled HEI contracts. Although none of Hometap’s ten-year HEI contracts have yet reached their full term and thus, no consumers have yet experienced foreclosures, the AGO asserts that Hometap’s slew of alleged unfair and deceptive conduct puts financially vulnerable homeowners at an unreasonable risk of foreclosures in the coming years.
Through filing the complaint, AG Campbell seeks to prevent Hometap from continuing its allegedly unlawful practices, restore financial losses to consumers, and ensure that Hometap’s HEI product is subject to all relevant consumer protections. AG Campbell also seeks relief to prevent significant foreseeable harm, including foreclosures, for homeowners with Hometap HEI contracts across Massachusetts.
This matter is being handled by Assistant Attorneys General Matthew Lashof-Sullivan, Daniel Bahls, Sarah Petrie, and Adelaide Pagano, Senior Trial Counsel Megan Barriger, Paralegals Sixiao Yu, Noam Miller, and Chiara McNally, and Division Chief Yael Shavit, all of the AGO’s Consumer Protection Division, with assistance from Civil Investigator Anthony Crespi.
Consumers who believe they have been subjected to an unfair or deceptive business practice, including by Hometap or another home equity investment company, may file a consumer complaint with the AGO online by visiting mass.gov/ago/consumercomplaint.