Home Equity Investments Carry High Costs, Regulation
Homeowners struggling to get traditional loans face high rates and shifting oversight with equity-sharing agreements.
Updated on Oct. 15, 2026 in Residential
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Home equity investment providers are expanding their reach even as regulators scrutinize the products for potential predatory practices. These agreements, which provide cash in exchange for a share of future home appreciation, are becoming more common as traditional credit options remain difficult to secure.
Why it matters
Shared equity products are gaining traction because many homeowners struggle to access traditional loans, with 35% of cash-out refinance and home equity applications denied in 2024. As providers seek to scale these agreements, a proposed Senate amendment could soon classify them as residential mortgages, bringing them under stricter oversight.
Between 2015 and 2025, the three largest home equity investment firms originated 54,000 agreements. In some cases, these arrangements carry implied effective interest rates of 30% or more, while roughly 25% of users hold credit scores below 600.
The players
Point
A financial company that provides home equity investments and recently launched a third-party originator program.
Unison
A provider of home equity investment products currently facing lawsuits regarding the structure of its agreements.
Unlock
A company offering home equity investments that is subject to ongoing consumer advocacy and regulatory scrutiny.
Hometap
An originator of shared equity home products named in legal actions alleging predatory lending practices.
The details
Home equity investments allow homeowners to access a lump sum without monthly payments, provided they agree to surrender a portion of their home's future value. This debt is repaid only when the property is sold or refinanced, often at a substantial premium. Because these products frequently target borrowers who have been denied traditional credit, they face growing allegations of predatory terms and potential regulatory reclassification.
Timeline
2015-2025: Major firms originated 54,000 total agreements.
2024: 35% of traditional home equity credit applications were denied.
October 2026: Point launched a new third-party originator program.
Money Landscape
Home equity investments currently operate in a regulatory gray area compared to traditional mortgages. A proposed amendment to the Truth in Lending Act would move these products under federal oversight, signaling a major shift toward stricter industry standards.
Homeowners should be cautious of the high effective interest rates, which can reach 30% or more, when considering alternatives to traditional loans. Before signing an agreement, discuss the long-term impact on your home equity with a qualified financial or tax professional.
The takeaway
While home equity investments offer immediate liquidity, the long-term cost can be significantly higher than conventional borrowing options. Before pursuing these products, evaluate your credit profile to see if you qualify for traditional HELOCs or home improvement loans, which remain the standard for credit access.
Further reading
Learn more about securing property-backed funding in our guide to Residential.
Source note: This article includes information reported by HousingWire.
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