Dear Members of the House Consumer Protection and Business Committee,
Please accept this written testimony on behalf of the Coalition for Home Equity Partnership (CHEP), related to House Bill 1464 – Concerning Home Equity Sharing Agreements (HB 1464). CHEP believes HB 1464 represents a significant step toward establishing a clear regulatory framework for the industry.
CHEP was founded in 2024 by three leading financial services companies[1] – Hometap Equity Partners LLC, Point Digital Finance, Inc., and Unlock Technologies, Inc. – dedicated to providing homeowners with innovative home-finance solutions. These comparatively new products are known as several different terms in the marketplace: “shared equity products,” as termed by our coalition, or otherwise referred to as “home equity sharing agreements” (HESAs) or “home equity investments” (HEIs). Though all are the same, for the purposes of this testimony and to align with the existing language in Washington, we will refer to them as HESAs.
What Are HESAs?
HESAs are not mortgage loans. They are equity-based products that enable homeowners to access the equity they have built in their most valuable asset — their home — without taking on debt. The most common use cases for HESAs are to pay off debt, improve a home, or fund a business.
Homeowners receive a lump sum of cash in exchange for a share of their home’s future equity or appreciation. HESAs do not require monthly payments and have more flexible eligibility requirements than mortgage loans.
Who Utilizes HESAs? Why?
A socially and economically diverse group of homeowners qualify for HESAs, as they are evaluated based on the investment in the property rather than the consumer’s ability to make recurring payments. This makes HESAs accessible to a broader range of homeowners, including consumers with less-than-perfect credit, small business owners, retirees, and those without steady income.
This accessibility is vital in today’s home finance marketplace, which has become increasingly inaccessible and unaffordable for many. While the value of properties has consistently risen over the past decade, the financial health of many homeowners has not. Numerous studies and surveys show that a significant number of American households are financially vulnerable. For example:
- A 2022 Federal Reserve study found many adults may not withstand even small financial disruptions. More than 30% of adults reported difficulty covering an unexpected $400 expense.
- A 2024-25 Bankrate survey found that a majority of American households do not have the financial wherewithal to cover a $1,000 emergency expense.
- More than 47 million Americans fall under the “subprime” category for credit scores, limiting their access or increasing their costs for some forms of traditional loan or credit products.
HESAs offer a solution to a wide array of consumer needs. The most common reason our customers choose HESAs is to pay off high-interest debts. By doing so, they can simplify their finances, reduce overall interest payments, and achieve better financial stability. Another popular use case is for home improvements. A homeowner that worked with a CHEP member used the received cash to renovate his kitchen, bathrooms, and yard, all while paying off some debt and improving his credit score. A different homeowner used the equity to pay off medical and credit card debt that he and his wife found themselves in after losing his job during the COVID-19 pandemic.
Additionally, many of our customers use HESAs to fund small business ventures, which help provide the capital needed to start or expand a business without the burden of monthly loan payments, thereby fostering entrepreneurial growth and financial independence.
Other use cases have included funding their children’s education, covering medical expenses, or supplementing retirement income. By tapping into their earned equity, HESAs have empowered homeowners to address urgent needs and invest in their financial futures.
Consumer Protections and Industry Best Practices
As we have noted, CHEP member companies follow best practices to ensure customers are protected. Some of these policies include:
- During the sales process, homeowners are provided access to adjustable, digestible online calculators that help them understand the costs of the investment and model various home price appreciation scenarios;
- CHEP members advise homeowners to seek their own legal and tax guidance before accepting an investment;
- Before closing, homeowners are provided with detailed disclosures outlining the critical product elements in a manner consistent with the approach taken in the integrated TRID/RESPA disclosures;
- Consumers are given a three-day rescission or cooling off period after signing the investment contract before the investment becomes binding; and
- CHEP members all utilize annualized cost caps to protect homeowners if they decide to repurchase the HESA shortly after signing or in situations where there is rapid home price appreciation.
In serving homeowners, CHEP members operate in a transparent manner to ensure customers are informed about the advantages and risks of HESAs. CHEP members adhere to applicable federal and state regulations. We also support clear and appropriate regulations that both protect consumers and ensure they have access to innovative financial products that suit their immediate or long-term needs. These are best practices we uphold, support, and expect other companies in our emerging industry to follow.
House Bill 1464 codifies many of these best practices and ensures that all companies offering HESAs in the State of Washington adhere to consistent standards of disclosure and consumer fairness. Further, by requiring licensure and oversight by the Department of Financial Institutions, House Bill 1464 provides certainty that companies operating in Washington will be held accountable when they fail to honor their obligations.
In conclusion, CHEP recognizes House Bill 1464 as a positive development that will provide clarity and structure in the shared equity industry. CHEP is committed to advocating for consumers and a competitive marketplace to ensure homeowners have the best options possible in financing their American Dream.
We appreciate your consideration and welcome the Committee’s questions to supplement this written testimony.
Respectfully,
Coalition for Home Equity Partnership
Ed McFadden
President
[1] CHEP members operate in Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington, and Washington, DC.
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RE: HB 1464 – Concerning Home Equity Sharing Agreements
Dear Members of the House Consumer Protection and Business Committee,
Please accept this written testimony on behalf of the Coalition for Home Equity Partnership (CHEP), related to House Bill 1464 – Concerning Home Equity Sharing Agreements (HB 1464). CHEP believes HB 1464 represents a significant step toward establishing a clear regulatory framework for the industry.
CHEP was founded in 2024 by three leading financial services companies[1] – Hometap Equity Partners LLC, Point Digital Finance, Inc., and Unlock Technologies, Inc. – dedicated to providing homeowners with innovative home-finance solutions. These comparatively new products are known as several different terms in the marketplace: “shared equity products,” as termed by our coalition, or otherwise referred to as “home equity sharing agreements” (HESAs) or “home equity investments” (HEIs). Though all are the same, for the purposes of this testimony and to align with the existing language in Washington, we will refer to them as HESAs.
What Are HESAs?
HESAs are not mortgage loans. They are equity-based products that enable homeowners to access the equity they have built in their most valuable asset — their home — without taking on debt. The most common use cases for HESAs are to pay off debt, improve a home, or fund a business.
Homeowners receive a lump sum of cash in exchange for a share of their home’s future equity or appreciation. HESAs do not require monthly payments and have more flexible eligibility requirements than mortgage loans.
Who Utilizes HESAs? Why?
A socially and economically diverse group of homeowners qualify for HESAs, as they are evaluated based on the investment in the property rather than the consumer’s ability to make recurring payments. This makes HESAs accessible to a broader range of homeowners, including consumers with less-than-perfect credit, small business owners, retirees, and those without steady income.
This accessibility is vital in today’s home finance marketplace, which has become increasingly inaccessible and unaffordable for many. While the value of properties has consistently risen over the past decade, the financial health of many homeowners has not. Numerous studies and surveys show that a significant number of American households are financially vulnerable. For example:
HESAs offer a solution to a wide array of consumer needs. The most common reason our customers choose HESAs is to pay off high-interest debts. By doing so, they can simplify their finances, reduce overall interest payments, and achieve better financial stability. Another popular use case is for home improvements. A homeowner that worked with a CHEP member used the received cash to renovate his kitchen, bathrooms, and yard, all while paying off some debt and improving his credit score. A different homeowner used the equity to pay off medical and credit card debt that he and his wife found themselves in after losing his job during the COVID-19 pandemic.
Additionally, many of our customers use HESAs to fund small business ventures, which help provide the capital needed to start or expand a business without the burden of monthly loan payments, thereby fostering entrepreneurial growth and financial independence.
Other use cases have included funding their children’s education, covering medical expenses, or supplementing retirement income. By tapping into their earned equity, HESAs have empowered homeowners to address urgent needs and invest in their financial futures.
Consumer Protections and Industry Best Practices
As we have noted, CHEP member companies follow best practices to ensure customers are protected. Some of these policies include:
In serving homeowners, CHEP members operate in a transparent manner to ensure customers are informed about the advantages and risks of HESAs. CHEP members adhere to applicable federal and state regulations. We also support clear and appropriate regulations that both protect consumers and ensure they have access to innovative financial products that suit their immediate or long-term needs. These are best practices we uphold, support, and expect other companies in our emerging industry to follow.
House Bill 1464 codifies many of these best practices and ensures that all companies offering HESAs in the State of Washington adhere to consistent standards of disclosure and consumer fairness. Further, by requiring licensure and oversight by the Department of Financial Institutions, House Bill 1464 provides certainty that companies operating in Washington will be held accountable when they fail to honor their obligations.
In conclusion, CHEP recognizes House Bill 1464 as a positive development that will provide clarity and structure in the shared equity industry. CHEP is committed to advocating for consumers and a competitive marketplace to ensure homeowners have the best options possible in financing their American Dream.
We appreciate your consideration and welcome the Committee’s questions to supplement this written testimony.
Respectfully,
Coalition for Home Equity Partnership
Ed McFadden
President
[1] CHEP members operate in Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington, and Washington, DC.
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