Abstract
Home equity sharing agreements are on the rise throughout the country. In a home equity sharing agreement, homeowners are given a lump sum of cash, upfront, in exchange for a portion of their home’s future value. Agreements are structured however the investment company prefers and are not subject to any state usury caps, mortgage loans, or federal lending laws. The investment companies believe that their product is exempt from all of these requirements, despite the high risk that home equity sharing poses to consumers. In reality, home equity sharing agreements are dangerous, unregulated mortgage loans, which are being utilized by unsophisticated and vulnerable consumers.
This Note explores the new phenomenon of home equity sharing agreements, compares them to typical home loans, touches on current state regulations that may address the issue,
and proposes a federal regulation to protect consumers who use these products. The proposed federal statute combines the strongest parts of the state regulations, while adding additional protection typically seen in federal consumer protection statutes, such as the Truth in Lending Act.
Ultimately, this Note expresses the idea that home equity sharing agreements must be regulated to protect consumers but not dismantled so as to remove the possibility of these becoming more common home loan arrangements. With the right amount of research and control, home equity sharing agreements could be the answer to many homeowners’ cash flow problems.
Recommended Citation
Lindsay Lankau, Equity Partners or Equity Predators? A Call for Federal Regulations to Safeguard Against Abusive Home Equity Sharing Agreements, 82 Wash. & Lee L. Rev. 1464 (2025).Available at: https://scholarlycommons.law.wlu.edu/wlulr/vol82/iss4/7
Included in
Banking and Finance Law Commons, Consumer Protection Law Commons, Housing Law Commons, Property Law and Real Estate Commons