Corporate Accountability Project
|
Financial Predation
|
Class Action Coverage
Class Action · District of New Jersey · Federal Court
Hometap’s Hidden Loan Trap: How 12,000+ Homeowners Were Deceived Into Predatory Equity Deals
A company called its mortgage loans “investment agreements” to escape federal lending law, then threatened homeowners with foreclosure when the balloon came due.
TL;DR
Hometap Equity Partners gave cash-strapped homeowners money in exchange for a share of their home’s future value, then disguised this transaction as an “Option Purchase Agreement” with a front-page disclaimer reading “THIS IS NOT A LOAN.” The lawsuit alleges this branding was a fraud: the product functions exactly like a mortgage, secured by a lien on the home, carrying compound interest rates between 17.9% and 21.5% annually, and ending in a balloon payment that could reach 70% of the home’s value. Homeowners who cannot pay face forced sale or foreclosure, without any of the legal protections federal and state law require of real mortgage lenders. Hometap has already securitized these contracts and sold them to investors in offerings totaling over $400 million, all while claiming the product is not subject to lending laws at all.
Over 12,000 families are caught in this trap. Demand that regulators treat predatory rebranding for what it is: a scheme to strip working families of their homes and their wealth.
12,000+
Homeowners ensnared across 17 states
$421M+
Securitizations sold to investors ($197M + $224M)
21.5%
Maximum compound annual interest rate charged
70%
Home value Hometap can claim at settlement
6%
New Jersey’s legal maximum interest rate
$103K
Cash advance to plaintiffs; $199K+ potentially owed back
Core Allegations
Core Allegations: What Hometap Did
Predatory product structure · Deceptive branding · Illegal foreclosure risk
| 01 | Hometap disguised a high-cost mortgage loan as an “Option Purchase Agreement” bearing the false disclaimer “THIS IS NOT A LOAN,” allowing the company to evade all federal and state lending disclosure requirements. | high |
| 02 | Hometap provided homeowners an upfront cash advance in exchange for a mortgage lien on their home, then structured repayment as a percentage of the home’s future value, silently accruing compound interest at rates between 17.9% and 21.5% annually, far above New Jersey’s 6% legal cap. | high |
| 03 | Hometap marketed its product as having “no monthly payments,” yet its contract allowed it to foreclose on the home if homeowners failed to pay property taxes, insurance, or maintenance costs. | high |
| 04 | At the end of the ten-year term, homeowners must pay a lump sum worth up to 70% of their home’s value or face forced sale or foreclosure, without the legal safeguards required of regulated reverse mortgage lenders. | high |
| 05 | Hometap targeted homeowners with low credit scores who had no conventional loan alternatives, a population that is statistically least likely to be able to refinance or repay a balloon sum in ten years. | high |
| 06 | Hometap charged homeowners more for appraisals than it paid third parties for those services, pocketing the difference as an undisclosed profit center while presenting it as a pass-through cost. | med |
| 07 | Hometap’s contract required homeowners to pay all closing costs and sale expenses at settlement, including costs that can reach tens of thousands of dollars, while Hometap collected its full equity share from the same proceeds. | med |
| 08 | Hometap paid plaintiffs roughly 12% of their home’s appraised value but positioned itself to receive up to 70% of the home’s value at settlement, a return structure its own materials describe as generating “stable returns across various housing cycles.” | high |
Regulatory Failures: How Oversight Broke Down
Unlicensed lending · Federal law violations · Consumer protection evasion
| 01 | Hometap operated as a mortgage lender in New Jersey without the required state license, in direct violation of the New Jersey Residential Mortgage Lending Act. | high |
| 02 | Hometap did not provide the Truth in Lending Act disclosures required at closing for mortgage loans, including the finance charge disclosure mandated by 15 U.S.C. §1635(i). | high |
| 03 | Hometap made no assessment of borrowers’ ability to repay the loan, a federal requirement under TILA for all residential mortgage originators (15 U.S.C. §1639c(a)(1)). | high |
| 04 | Hometap’s contract included a mandatory arbitration clause, which federal law expressly prohibits in residential mortgage agreements (15 U.S.C. §1639c(e)(1)), cutting off homeowners’ right to access courts to save their homes. | high |
| 05 | Hometap’s product qualifies as a high-cost mortgage under both TILA and New Jersey’s Home Ownership Security Act, yet it provided none of the pre-loan counseling or additional disclosures those statutes require. | high |
| 06 | Hometap’s 2023 securitization of its home equity agreements was awarded “Residential Mortgage Backed Security of the Year” by industry publication GlobalCapital, directly contradicting its public claim that its product is not a mortgage. | med |
Profit Over People: Revenue Prioritized Over Ethics
Investor materials · Securitization · Downside protection for Hometap only
| 01 | Hometap securitized its home equity agreements and sold them to institutional investors in two offerings totaling over $421 million, treating family homes as raw financial instruments while maintaining no accountability to the homeowners whose liens were packaged. | high |
| 02 | Hometap investor materials describe its product as offering “downside protection, even during times of declining home values,” meaning Hometap designed the product so that investors profit even when homeowners lose value on their property. | high |
| 03 | Hometap told investors there is “$9+ Trillion” in home equity that is “untapped,” framing the financial security of millions of American homeowners as an extraction opportunity rather than a protected asset. | high |
| 04 | Hometap structured the product so that even in declining home markets, the gap between what it pays upfront and what it receives at settlement virtually guarantees it gets its money back with profit, while leaving homeowners exposed to market risk. | high |
| 05 | Hometap reserved the right to extend the ten-year term by up to an additional ten years at its sole discretion, keeping homeowners locked in and accumulating compound interest with no ability to exit on their own timeline. | med |
Corporate Accountability Failures: Silencing Homeowners
Rights stripping · Arbitration mandates · Indemnification traps
| 01 | Hometap’s contract included a provision attempting to make homeowners waive all federal and state consumer lending protections, including usury ceilings and disclosure requirements, before they could even understand the product they were signing. | high |
| 02 | The contract capped Hometap’s liability at the original “Investment Payment” no matter how many laws it violated or how much harm it caused, effectively shielding the company from meaningful financial accountability. | high |
| 03 | Hometap required homeowners to expressly waive claims against all of Hometap’s agents, assignees, affiliates, employees, and directors, while the contract simultaneously disclaimed Hometap’s responsibility for the negligence or misconduct of any agent it selected. | high |
| 04 | The contract’s indemnification clause required homeowners to cover Hometap’s legal expenses for a wide range of claims, seemingly including claims brought by the homeowners themselves, regardless of outcome. | high |
| 05 | Hometap defined “Event of Default” to include challenging the enforceability of its dispute resolution clause, meaning homeowners who attempted to assert their rights could trigger Hometap’s right to force a sale of their property. | high |
| 06 | Plaintiffs were not offered any opportunity to negotiate the 33-page contract and signed in the presence of a title company agent, not a Hometap representative, with no independent legal counsel present. | med |
Community Impact: Families Losing Their Homes
Forced sales · Equity stripping · Displacement risk
| 01 | Plaintiffs, a couple who bought their first home in 2018 after a job loss and health-related income reduction, received $103,575 from Hometap. They now face an obligation that could reach $199,000 or more in ten years, threatening the same home they took the product to save. | high |
| 02 | Hometap targets individuals with poor credit and high-cost debt, the homeowners least equipped to manage a ten-year balloon payment, and explicitly does not evaluate their ability to repay before closing the loan. | high |
| 03 | When homeowners are forced to sell or are foreclosed upon, Hometap takes a large share of the sale proceeds while homeowners must cover all transaction costs, leaving displaced families with far less equity than they would otherwise retain. | high |
| 04 | Many Hometap borrowers are unlikely to be able to refinance at the ten-year mark due to the same credit challenges that drove them to Hometap originally, making forced sale or foreclosure a near-certain outcome for a significant portion of the 12,000+ customers. | high |
Timeline of Events
2018
Plaintiffs Keicha Greenidge and Ryan Billey purchase their first home in Jackson Township, New Jersey, for themselves and their two children.
2018
Ryan Billey loses his job of 18 years. Keicha Greenidge’s work hours are reduced due to health problems. The family falls behind on household expenses and begins searching for financial relief.
Pre-2023
A neighbor’s use of Hometap’s product brings it to the plaintiffs’ attention. Due to their negative credit rating, conventional loan options are unavailable.
Feb 14, 2023
Plaintiffs sign the 33-page Hometap “Option Purchase Agreement.” No Hometap representative is present; only an agent from the title company ClearEdge attends. Hometap advances $103,575 and places a mortgage lien on their home.
Oct 2023
Hometap Technologies and Saluda Grade close their first rated Home Equity Agreement securitization, selling $197 million of packaged homeowner contracts to investors.
Apr 2024
Hometap and Saluda Grade close their second securitization, selling an additional $224 million in bundled home equity agreements. The offering is later awarded “RMBS Deal of the Year” by GlobalCapital.
2025
Hometap reports over 12,000 customers in 17 states. Class action lawsuit filed in the U.S. District Court for the District of New Jersey, alleging violations of TILA, HOFA, the New Jersey Consumer Fraud Act, and TCCWNA.
2033 (projected)
Plaintiffs’ ten-year “Expiration Date” arrives. Without a court ruling or settlement, plaintiffs face a payment of $177,000 to $199,000 or forced sale of their home by Hometap.
Direct Quotes from the Legal Record
Quote 1
Hometap’s own investor materials confirm foreclosure is a planned outcome
Core Allegations
“either foreclose on the property or force a sale of the property if the homeowner cannot otherwise settle.”
💡 Hometap told investors in plain language that forced sale or foreclosure is an expected resolution mechanism, directly contradicting its consumer-facing claim that this is a no-risk “investment partnership.”
Quote 2
Hometap claimed its product was not subject to any lending law
Regulatory Failures
“to the fullest extent possible … the Hometap Agreement is not subject to any federal, state and/or local law concerning consumer credit, including, without limitation, usury ceilings, disclosures, and any other requirements, restrictions, limitations or prohibitions set forth in such laws.”
💡 Hometap embedded a clause in its contract attempting to place itself entirely outside the reach of consumer protection law, including laws designed specifically to prevent predatory lending and protect homeowners from foreclosure.
Quote 3
Hometap’s investor pitch frames $9 trillion in home equity as an extraction target
Profit Over People
“$9+ Trillion” in home equity that is currently “untapped.”
💡 Hometap explicitly pitched investors on the idea that American homeowners’ built-up equity is an untapped resource to be monetized, a framing that treats hard-earned home equity as a corporate asset rather than a family’s financial foundation.
Quote 4
Hometap’s own contract called it a mortgage
Regulatory Failures
“Hometap has a mortgage on Plaintiffs’ home.”
💡 Despite publicly insisting its product is not a mortgage loan, Hometap’s own contract documents, title search records, and insurance policy all use the terms “lender,” “borrower,” “loan,” and “First Mortgagee,” exposing the consumer-facing branding as deliberate misdirection.
Quote 5
The product’s “downside protection” only protects Hometap
Profit Over People
“Embedded downside protection in [the home equity agreement] product structure allows for stable returns across various housing cycles.”
💡 Hometap advertised “downside protection” to investors, not to homeowners. The structure ensures Hometap profits even when home values fall, while homeowners bear the full risk of being unable to settle the balloon payment.
Quote 6
Hometap can force joint ownership and a compelled sale
Core Allegations
“take joint ownership of the Property… and [thereafter] soliciting a Transfer of the entire Property, including [the homeowner’s] interest, to one or more Third-Party Buyers…”
💡 If a homeowner cannot pay the balloon sum, Hometap’s contract grants it the right to seize partial ownership of the home and compel its sale to strangers, a form of forced dispossession with none of the legal protections required in a formal foreclosure.
Quote 7
Hometap stripped homeowners of punitive and consequential damage rights
Corporate Accountability Failures
“in no event will Hometap’s aggregate liability arising out of or related to the Hometap Agreement or the Property exceed the Investment Payment.”
💡 Hometap capped its own legal liability at the original cash advance amount, no matter how egregious its conduct. A company that illegally denies homeowners their lending rights and triggers wrongful foreclosure faces financial exposure limited to the amount it originally lent.
Quote 8
Plaintiffs took the product to save their home; it threatens to take it instead
Community Impact
“Plaintiffs did not understand that Hometap could force them to sell their home in 10 years and only took out the loan to save their home. If they had understood the consequences, they never would have signed the contract.”
💡 The tragic irony of this case is embedded in this sentence: a family in financial distress sought help keeping their home, and were sold a product that may ultimately take it from them.
Commentary
Is Hometap’s product actually a mortgage loan?
The lawsuit argues convincingly that it is. Hometap advances cash to homeowners, takes a mortgage lien on the home as collateral, and requires repayment within ten years or less. Every element of that structure matches the legal definition of a mortgage loan. The “Option Purchase Agreement” label and the “THIS IS NOT A LOAN” disclaimer are, according to the complaint, cosmetic rebranding designed to evade the consumer protection laws that every other mortgage lender must follow. Hometap’s own documents use the words “lender,” “borrower,” “loan,” and “First Mortgagee.” Its securitization won an award specifically for residential mortgage-backed securities. The name it chose for the product does not change what the product does.
Who is most at risk from this product?
Hometap explicitly targets homeowners with poor credit scores and high-cost debt. These are people who cannot qualify for conventional home equity loans or refinancing. By design, this population is the least likely to be able to pay off a six-figure balloon sum in ten years or refinance to cover it. The product’s underwriting ignores income, employment, and assets entirely, meaning Hometap advances money to people without any verification that those people can ever repay it. The complaint alleges this is not an oversight; it is a feature. If homeowners cannot settle, Hometap can force a sale and collect its percentage from the proceeds.
How is this different from a reverse mortgage?
A reverse mortgage is a regulated product with substantial legal protections: mandatory independent counseling, ability-to-repay requirements, and restrictions on who can be sold the product. Federal law requires lenders to ensure homeowners who cannot pay are treated with specific legal safeguards before any foreclosure can proceed. Hometap’s product mirrors the economic structure of a reverse mortgage, with no monthly payments and a lump sum due at the end, but without any of those legal protections. The complaint argues this is deliberate: by calling the product something else, Hometap sidesteps the entire framework designed to protect financially vulnerable homeowners from exactly this kind of arrangement.
How serious is this lawsuit?
This is a federal class action alleging violations of the Truth in Lending Act, a major federal statute with significant remedies including rescission of the entire loan transaction, return of all fees charged, and statutory damages. The New Jersey claims add the Consumer Fraud Act, the Home Ownership Security Act, and the Truth in Consumer Contract Warranty and Notice Act. The complaint demands punitive and treble damages on behalf of potentially thousands of class members. Plaintiffs are represented by Francis Mailman Soumilas, a firm with an extensive record of victories in consumer protection class actions. The case involves fundamental questions about whether fintech companies can simply rename predatory loan products to escape a century of consumer protection law.
Why did Hometap securitize these contracts?
Securitization allowed Hometap to rapidly scale its business by selling packaged homeowner contracts to institutional investors, generating hundreds of millions of dollars to fund new loans. This is the same business model that drove the 2008 housing crisis: originate loans, bundle them, sell the risk to investors, and repeat. The complaint notes that Hometap’s investor pitch explicitly touted the $9 trillion in “untapped” home equity sitting in American homes, framing working families’ financial security as a market opportunity. Once these contracts are securitized, the investors who hold them have financial interests that may be adverse to the homeowners still living in those homes.
What did Hometap do with the arbitration clause?
Hometap embedded a mandatory arbitration clause in its contract, which is explicitly illegal in residential mortgage agreements under federal law (15 U.S.C. §1639c(e)(1)). Congress banned arbitration in mortgage contracts precisely because courts are often the only venue where homeowners can halt a wrongful foreclosure in time to save their home. Hometap not only included the clause; it also defined challenging the arbitration provision as an “Event of Default” that could trigger Hometap’s right to force a sale of the property. In other words: try to assert your right to a court, and Hometap can take your house.
What can I do to prevent this from happening again?
Several concrete actions can drive change. If you or someone you know has entered into a Hometap Home Equity Investment agreement, contact a consumer protection attorney immediately to understand your rights under TILA and state law. File a complaint with the Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov/complaint and with your state attorney general’s office: regulators who receive volume complaints prioritize investigations. Contact your federal and state legislators and demand that they close the regulatory gap allowing fintech companies to label mortgage products as “option agreements” to escape disclosure requirements. Support organizations working on housing security and predatory lending reform. Share this case publicly: public pressure has forced regulators to act on predatory fintech products before, and visibility matters.
What does the “option agreement” label actually conceal?
An option contract, in normal legal usage, gives one party the right to buy something at a future date for a price agreed today. The party with the option pays a small “option fee” to hold that right open. Hometap flipped this structure: it pays the homeowner a large sum upfront and charges the homeowner a percentage of their home’s value at the end, which functions economically as interest. More importantly, a genuine option contract does not include a mortgage lien on the subject property. Hometap’s contract does. The “option” framing is, according to the lawsuit, a legal fiction constructed specifically to allow Hometap to avoid the word “loan” and thereby avoid the entire regulatory apparatus that word triggers.
💡 Explore Corporate Misconduct by Category
Corporations harm people every day — from wage theft to pollution. Learn more by exploring key areas of injustice.
- 💀 Product Safety Violations — When companies risk lives for profit.
- 🌿 Environmental Violations — Pollution, ecological collapse, and unchecked greed.
- 💼 Labor Exploitation — Wage theft, worker abuse, and unsafe conditions.
- 🛡️ Data Breaches & Privacy Abuses — Misuse and mishandling of personal information.
- 💵 Financial Fraud & Corruption — Lies, scams, and executive impunity.
