Home Equity Investment

Home Equity Investments and Equity Sharing Agreements: Predatory Loans Exposed

At Lawyers Realty Group, we are dedicated to protecting California homeowners from deceptive financial products like home equity investments (HEIs), also known as shared appreciation loans or equity-sharing agreements. Recent court rulings, highlighted by the National Consumer Law Center (NCLC), reveal these “investments” as nothing more than predatory mortgage loans that can illegally strip homeowners of their hard-earned equity. Read the full NCLC article.

Below, we summarize these findings to help you understand the risks and protect your financial future.

How Home Equity Investments Deceive Homeowners

Since 2017, home equity investments (HEIs) have been aggressively marketed, often by private equity-backed firms, as “option agreements” or “equity-sharing agreements” promising quick cash without monthly payments. These products primarily target older California homeowners with valuable properties who need immediate funds but may not qualify for traditional second mortgages.

Despite their appealing pitch, HEIs are actually complex mortgage loans that place a lien on your home, entitling investors to a significant portion—sometimes up to 70%—of your home’s future value upon sale, death, or contract expiration. Homeowners are misled into believing these are not loans, yet HEIs carry the same foreclosure powers as traditional loans without providing the required warnings, disclosures, or borrower rights.

The harsh reality doesn’t become clear until homeowners attempt to sell or refinance. The burdensome and often unconscionable terms of HEIs then rear their ugly head, with homeowners facing hundreds of thousands of dollars in repayments and fees to unshackle their home from the chains of what is really an illegal loan.

Recent Court Rulings Expose HEI Deceptions

Courts in multiple jurisdictions are holding HEI lenders accountable, classifying these products as loans subject to consumer protection laws. Key cases include:

  • Ninth Circuit (Olson v. Unison Agreement Corp., 2025 WL 2254522, 9th Cir. Aug. 7, 2024): The court ruled that HEIs are loans, not option agreements, and fall under Washington’s consumer protection laws, including reverse mortgage and unfair practices statutes. The agreements create a “credit obligation” requiring future payments. Read the Plaintiff’s Opening Brief.
  • Bankruptcy Court (Stone v. Real Estate Equity Exchange, 2025 WL 2222829, Bankr. D. Colo. July 30, 2025): This ruling upheld claims under Colorado’s consumer protection and bankruptcy laws, allowing challenges like unconscionability and rejection of executory contracts. View the Complaint.
  • Federal Magistrate Judge (Weingot v. Unison Agreement Corp., 2025, D.N.J.): The judge recommended denying the lender’s motion for summary judgment, citing deceptive marketing and misrepresentations that misled homeowners about the terms of the equity share agreement. Read the Court order.

These rulings expose how HEI lenders use deceptive labels and complex contracts to hide the predatory nature of their products. Courts are now looking beyond these tactics, focusing on the substance of the agreements and the lenders’ business practices to protect consumers.

Key Takeaways for California Homeowners

Recent court decisions confirm that home equity investments are predatory loans disguised as investments. The law is increasingly protecting homeowners, as seen in the Olson, Stone, and Weingot cases. The NCLC issue brief outlines strategies for challenging HEIs, including:

  • Multiple Legal Claims: Pursue claims for fraud, unconscionability, rescission, quiet title, and violations of state consumer protection, mortgage lending, and usury laws.
  • Contract Scrutiny: Highlight repayment obligations or illusory “options” to prove the product is a loan.
  • Business Model Exposure: Analyze lenders’ marketing and investor materials to reveal predatory intent.
  • Arbitration Challenges: The Truth in Lending Act’s prohibition on arbitration in mortgage loans may apply, as HEIs are classified as credit obligations.

Contact Lawyers Realty Group for Expert Help

Before signing any home equity investment agreement, seek legal, financial, and real estate advice to protect your interests. HEI companies employ sophisticated legal teams, and you need experienced representation. At Lawyers Realty Group, our Attorney/Realtor provides tailored insights to navigate these complex agreements. Call (949) 264-0966 for a free legal analysis with no obligation.

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