Hometap’s “Investment Agreement” Is a Predatory Mortgage in Disguise
The Non-Financial Ledger
Ryan Billey worked the same job for 18 years. Then he lost it. His wife, Keicha Greenidge, kept working, but her hours were cut because of health problems. They had two children, a house they bought in 2018 in Jackson Township, New Jersey, and for the first time in their lives, they owned something. That home was the financial floor their family stood on.
When the bills started piling up and conventional lenders turned them away because of bad credit, a neighbor mentioned Hometap. That is how this product works. It finds you when your options are gone. Hometap’s own marketing targets people with low credit scores who need to pay off high-cost debt. It does not target people who are doing fine. It targets people who are scared.
No one from Hometap ever sat across from Keicha and Ryan. When they signed a 33-page contract on Valentine’s Day 2023, only a title company agent was in the room. There was no negotiation. There were no alternatives offered. The couple signed because they needed to save their home and had nowhere else to go. They had no idea that the document they signed gave Hometap the legal power to take that same home away from them in 10 years.
What they thought they were doing was buying time. What they actually did, according to the lawsuit, was hand Hometap a mortgage lien and agree to pay back roughly a third of the total value of their home in a single lump sum before 2033. They received $103,575. They may owe between $177,000 and $199,000 or more, depending on how the home’s value moves. They must also cover 100% of any closing costs when that settlement comes due. Hometap takes the equity; Keicha and Ryan pay the transaction fees.
If they cannot produce that money, Hometap can, under the contract, take joint ownership of the property and force its sale to a third party. The family that scraped together enough to buy their first home would be put out of it by the same company that called itself their “partner.” Their two children would watch it happen. And Hometap’s own investor materials describe this exact outcome, the foreclosure or forced sale of a family’s home, as its “downside protection.”
That phrase, “downside protection,” appears in Hometap’s investor pitch materials. It describes what happens when a homeowner cannot pay. For investors, it is a reassurance. For the family living in the house, it is an eviction.
“Only took out the loan to save their home. If they had understood the consequences, they never would have signed the contract.”
How the Product Actually Works: Anatomy of a Disguised Mortgage
Hometap’s contract is titled “Option Purchase Agreement” and states explicitly that it is not a loan. The lawsuit argues that every structural feature of the product is, in fact, a loan’s structural feature.
- Fast Cash, No Underwriting: Hometap provides an upfront cash payment to the homeowner with no documentation or evaluation of income, employment, or assets other than the home itself. The complaint calls this the “principal amount of a loan” dressed up as an “Investment Amount.”
- The Hometap Fee and Hidden Costs: Hometap retains a 3% “Origination Fee” from the advance. On the Greenidge-Billey transaction, they received $103,575 on a stated amount of roughly $106,682. Additionally, Hometap charges more for appraisals than it pays third parties, pocketing the difference while presenting it as a pass-through cost.
- The Balloon Payment: The homeowner makes zero monthly payments for 10 years. At the 10-year mark, a single enormous lump sum comes due. This is called the “Hometap Share.” It equals a percentage of the home’s value at settlement, not the original advance amount.
- The Compounding Interest Disguise: Hometap describes its profit as an “equity share.” The complaint demonstrates that this is compound interest accruing silently, capped at 20% annually per Hometap’s marketing but documented in the specific contract as effective rates between 17.936% and 21.523% annually. New Jersey law caps interest at 6%.
- The Mortgage Lien: Hometap requires homeowners to grant it a mortgage on the property. This is a present, immediate property right, not a future contractual option. Hometap is listed as “First Mortgagee” on the homeowners’ insurance policy, and the transaction documents carry a “Loan Number.”
- Foreclosure as the Exit: If the homeowner cannot produce the lump sum, Hometap can take joint ownership of the property and force its sale. Hometap’s own investor materials confirm this plainly: it will “either foreclose on the property or force a sale of the property if the homeowner cannot otherwise settle.”
- Hometap’s Guaranteed Returns: The complaint notes that Hometap pays roughly 12% of a home’s value upfront but is positioned to receive up to 70% back. Because the gap between what Hometap advances and what it can collect is so large, the company gets paid in full even if the home loses significant value. Hometap does not actually share in the homeowner’s losses.
- Unilateral Extension Power: Hometap can extend the 10-year term by up to an additional 10 years at its sole discretion, with no consent required from the homeowner. The homeowner cannot extend it. Only Hometap can.
What Hometap Told You vs. What the Contract Says
The gap between Hometap’s consumer-facing marketing and the actual terms of its contract is documented in the complaint and in Hometap’s own investor materials.
Legal Receipts: What the Documents Actually Say
Every quote below is sourced directly from the complaint filed in the U.S. District Court for the District of New Jersey or from materials cited within it. Nothing is paraphrased.
SOURCE: Hometap Option Purchase Agreement, § 21.5, cited in Complaint ¶ 75
“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.”
- This clause asks homeowners to agree, in writing, that consumer protection law does not apply to this contract. The complaint calls it unenforceable, but notes it functions to intimidate homeowners out of asserting their legal rights.
- Usury ceilings exist to prevent predatory interest rates. This clause attempts to pre-emptively erase them. New Jersey’s usury cap is 6%. The complaint documents effective rates more than three times that figure.
SOURCE: Hometap Option Purchase Agreement, § 3.1(b), quoted in Complaint ¶ 17
“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…”
- This is the foreclosure clause. If the homeowner cannot produce the balloon payment, Hometap does not merely sue. It takes co-ownership of the property and arranges its sale without requiring the homeowner’s consent.
- Critically, this power exists without any of the legal protections that apply to traditional mortgage foreclosures, because Hometap insists its product is not a mortgage.
SOURCE: Hometap investor materials, quoted in Complaint ¶ 57
“Embedded downside protection in [the home equity agreement] product structure allows for stable returns across various housing cycles.”
- “Downside protection” for Hometap’s investors means the company gets paid even when home values fall. That protection is built into the product by making the gap between what Hometap advances and what it can collect large enough to absorb depreciation.
- The risk is not shared. The homeowner experiences the full market loss on their living situation; Hometap experiences a stable return. These are not “investment partners.”
SOURCE: Hometap investor materials, quoted in Complaint ¶ 58
“Investment returns are uncorrelated with broader markets and inflation-protected.”
- Hometap tells investors its returns are immune to market conditions. The mechanism for that immunity is the forced sale or foreclosure clause. The homeowner’s ability to stay housed is the instrument of that immunity.
- This statement also directly contradicts Hometap’s consumer marketing, which implies the company shares in both gains and losses alongside the homeowner.
SOURCE: Hometap Option Purchase Agreement, § 20 and § 20.4, cited in Complaint ¶¶ 78–79
[Mandatory arbitration clause.] “In no event will Hometap’s aggregate liability arising out of or related to the Hometap Agreement or the Property exceed the Investment Payment.”
- The mandatory arbitration clause is illegal under federal law. TILA, 15 U.S.C. § 1639c(e)(1), explicitly prohibits arbitration clauses in residential mortgage contracts. Hometap’s contract contains one.
- The liability cap clause means that regardless of how many laws Hometap breaks or how much harm it causes, the maximum it can ever be ordered to pay is the original advance amount. Punitive damages and consequential damages are stripped entirely.
SOURCE: Hometap Option Purchase Agreement, § 16, cited in Complaint ¶ 82
[Contract defines “Event of Default” to include] challenging the enforceability of the dispute resolution terms [which gives Hometap the power to seek damages, injunctive relief, specific performance, or force the sale of the property].
- This clause makes it an “Event of Default” for a homeowner to take Hometap to court or challenge the arbitration clause. An “Event of Default” triggers Hometap’s right to force a home sale.
- In plain terms: the contract threatens homeowners with losing their house if they try to sue Hometap. The complaint identifies this as a deliberate deterrent designed to prevent consumers from asserting their legal rights.
“Hometap tells investors its returns are uncorrelated with broader markets. The mechanism for that immunity is the forced sale clause. The homeowner’s ability to stay housed is the instrument of Hometap’s stable returns.”
12,000 Families. $421 Million Securitized. And Growing.
Hometap’s individual contracts are the raw material for a much larger financial operation. The company captures equity from homeowners and packages it for institutional investors, following the same playbook that produced the 2008 housing crisis.
- Scale: As of the complaint’s filing, Hometap reports over 12,000 customers across 17 states. Each customer is a homeowner who signed an agreement that the complaint argues is an unregulated, unlicensed mortgage loan.
- Securitization: Hometap bundles these contracts and sells them to investors. Two securitization offerings are documented in the complaint: one closed in October 2023 for $197 million, and a second in April 2024 for $224 million. Combined: $421 million in securities backed by homeowners’ equity.
- The Award: Hometap’s 2023 securitization was named “Residential Mortgage Backed Security of the Year” at the 2024 GlobalCapital US Securitization Awards. The award category is “residential mortgage backed.” Hometap tells consumers the product is not a mortgage.
- The Target Market: Hometap tells investors there is “$9+ trillion” in home equity currently held by homeowners. The company frames this as an “untapped” opportunity. The complaint’s language is direct: that equity is “in the hands of homeowners who paid for it.”
- The 2008 Echo: The complaint opens by placing Hometap in historical context: the company is another iteration of the private-money products that fueled the 2008 housing collapse, presenting something genuinely dangerous as something original and legally exempt.
Societal Impact Mapping
Public Health
Housing insecurity is a direct driver of physical and mental health deterioration. Hometap’s product design builds that insecurity into its structure.
- The complaint documents that Hometap specifically targets people with low credit scores who are already in financial distress, meaning the product reaches the population least equipped to absorb a 10-year balloon payment. People already managing health problems and job instability, like the plaintiffs, are Hometap’s intended customer.
- The complaint explicitly notes that Keicha Greenidge’s work hours were reduced due to health problems before the couple signed. Hometap conducted no assessment of whether either plaintiff could sustain the financial obligations of the contract over a decade. A significant subset of homeowners are, by the complaint’s analysis, structurally at risk of losing their homes when contracts mature.
- The 10-year cliff, combined with zero ability-to-repay underwriting, creates a predictable public health pipeline: families who entered the contract in medical or financial crisis are the most likely to face forced displacement when the balloon comes due. Forced displacement is a documented cause of increased mortality, mental illness, and chronic disease among displaced adults and their children.
- Children in the home are not mentioned in Hometap’s underwriting because there is no underwriting. The Greenidge-Billey family has two children. The contract was signed to keep the family together in the home. The structure of the contract makes that outcome uncertain at the 10-year mark regardless of how the family’s finances recover.
Economic Inequality
Hometap’s product extracts wealth from households that have little of it, concentrates that wealth in institutional investor hands, and does so through a legal fiction that strips regulatory protection from the transaction.
- Home equity is the primary wealth-building mechanism for working- and middle-class American families. Hometap’s product captures a percentage of that equity, compounding silently, and routes it to institutional investors via securitized offerings worth hundreds of millions of dollars.
- The complaint documents that Hometap advances roughly 12% of a home’s value while positioning itself to receive up to 70%. The gap between those numbers represents wealth transferred from the homeowner to Hometap’s investor pool.
- Hometap targets consumers with low credit scores who cannot access conventional lending. These consumers have the fewest alternatives and the least financial cushion. They are also the least likely to have the resources to challenge a 33-page contract written by Hometap’s lawyers.
- At the time of sale, the homeowner must cover 100% of transaction costs including closing costs, appraisal, and inspection while Hometap takes its percentage of the proceeds. A family forced to sell cannot pocket even the equity they built; they are paying to fund their own displacement.
- The securitization of these contracts turns individual homeowners’ financial desperation into institutional yield products. The $421 million in offerings documented in the complaint represents a transfer of wealth from vulnerable homeowners to investors mediated by a product the complaint argues was illegal from the moment it was signed.
- Because Hometap is not licensed as a mortgage lender and does not comply with TILA or New Jersey lending law, it competes with regulated lenders by avoiding the consumer protection costs those lenders must bear. This creates a market where predatory products have a structural cost advantage over compliant ones.
The Cost of a Life: What Hometap’s Numbers Mean
The cash advance Hometap gave the Greenidge-Billey family in exchange for a mortgage lien on their home and the right to collect between $177,000 and $199,000+ within 10 years, at effective compound interest rates of 17.9% to 21.5% annually, with no ability-to-repay assessment and no licensed lender status in New Jersey.
New Jersey’s legal interest rate cap: 6%. The plaintiffs received their first home in 2018. They signed this contract to keep it.
Total raised in two securitization offerings from bundled homeowner contracts in 18 months (Oct 2023 – Apr 2024)
Hometap customers across 17 states, each under a contract the complaint argues violates federal and state law
Home equity Hometap tells investors is “untapped” — meaning still in the hands of the homeowners who built it
Effective annual compound interest rate on plaintiffs’ contract, versus New Jersey’s 6% statutory usury ceiling
Who Controls What: The Corporate Structure Behind Your Contract
Hometap operates through a parent company and special purpose vehicles designed to separate the contractual liability from the operating entity. The complaint names both.
The Timeline: From Desperation to Lawsuit
The chronology of this case shows how the product was designed for a specific vulnerability window, and how long it takes for legal accountability to appear.
What Now: Who to Contact, What to Watch, How to Fight Back
The class action is filed and seeking certification. Here is who is responsible, who is watching, and what you can do if you or someone you know has signed a Hometap HEI contract.
The Defendants
- Hometap Equity Partners, LLC: Primary operating entity. Headquartered in Boston, Massachusetts. Delaware LLC. Employs Hometap’s staff, negotiates contracts, controls all subsidiaries.
- Hometap Investment Partners III SPV: Delaware-registered special purpose vehicle. The contractual counterparty on the Greenidge-Billey HEI and, the complaint implies, on other New Jersey contracts in this cohort.
Legal Claims Filed
- Count 1 — Truth in Lending Act (TILA), 15 U.S.C. §1602: Failure to provide required disclosures, operating without a mortgage license, including an illegal arbitration clause, and failing to assess ability to repay.
- Count 2 — NJ Home Ownership Security Act (HOFA), N.J.S.A. §46:10B-22: High-cost mortgage violations, illegal fees, missing mandated notices, required arbitration.
- Count 3 — NJ Consumer Fraud Act (CFA), N.J.S.A. §56:8-1: Deceptive and unconscionable practices, charging above New Jersey’s usury cap, operating without a license, unlawful lien on personal property.
- Count 4 — NJ Truth in Consumer Contract Warranty and Notice Act (TCCWNA), N.J.S.A. §56:12-15: Offering consumer contracts that violate state and federal law.
- Count 5 — Declaratory and Injunctive Relief, N.J.S.A. 2A:16-52: Seeking to enjoin collection of HEI amounts and void contracts statewide.
Regulatory Watchlist
- CFPB (Consumer Financial Protection Bureau): Primary federal regulator for mortgage lending disclosures and TILA enforcement. If you have signed a Hometap HEI, you can submit a complaint at consumerfinance.gov/complaint.
- FTC (Federal Trade Commission): Jurisdiction over deceptive trade practices. Hometap’s marketing claims (“not a loan,” “no payments,” “your partner”) may qualify as unfair or deceptive acts under FTC authority.
- New Jersey Department of Banking and Insurance (DOBI): Enforces New Jersey’s Residential Mortgage Lending Act. The complaint states Hometap is unlicensed in New Jersey. DOBI can pursue licensing violations independently of litigation.
- SEC (Securities and Exchange Commission): The securitization of these contracts into rated RMBS offerings may raise disclosure questions for institutional investors if the underlying contracts are found to be illegal loans.
- State Attorneys General (17 states): Hometap operates in 17 states. Any state AG with a consumer protection mandate has standing to investigate the product structure in their jurisdiction.
If You Signed a Hometap Contract
- Contact the plaintiff’s attorneys: Francis Mailman Soumilas, P.C., 1600 Market Street, Suite 2510, Philadelphia, PA 19103. Phone: (215) 735-8600. Email: jfrancis@consumerlawfirm.com or jsoumilas@consumerlawfirm.com. This is the firm representing the class.
- File a CFPB complaint: Go to consumerfinance.gov/complaint. Document every fee you paid, every communication from Hometap, and your original contract. The CFPB tracks complaint patterns and uses them to prioritize enforcement actions.
- Contact your state AG’s consumer protection division: Every state has one. Report the contract terms, the interest rate you are being charged, and the foreclosure risk you were not clearly disclosed before signing.
- Connect with housing counselors: HUD-approved housing counselors provide free or low-cost advice on mortgage and foreclosure alternatives. Find one at hud.gov/findacounselor. This is the counseling that Hometap was legally required to provide before closing and did not.
- Talk to your neighbors: Hometap markets through word of mouth and neighbor referrals, as this case documents. The same channel can carry information about the lawsuit and your rights. People in your community who signed these contracts need to know this case exists.
The source document for this investigation is attached below.
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