Multiple lawsuits claim Hometap violated TILA in HEI contracts

Boston-based home equity investment (HEI) provider Hometap is facing multiple lawsuits from customers claiming that the company has violated the Truth in Lending Act (TILA) and is promoting a “predatory and abusive mortgage loan product.”

The latest class-action suit, filed June 23 by plaintiff Marlene Crawford, a Hometap customer and resident of California, accuses the company of violating TILA and engaging in unlawful, deceptive and unfair business practices.

The lawsuits allege Hometap improperly structured its home equity investment contracts as “Option Purchase Agreements” to avoid federal and state mortgage lending laws. The plaintiffs say the agreements are mortgages subject to TILA and accuse the company of marketing them as “not a loan” to circumvent required consumer protections.

Hometap did not immediately respond to HousingWire‘s requests for comment regarding the litigation. But in one of the class actions — filed in April by Seattle plaintiffs Richard and Romy Hoffman — Hometap contends the dispute over whether the contracts are subject to TILA should be decided by an arbitrator.

“TILA does not bar enforcement of the arbitration agreement because the Agreement does not fit within TILA’s scope,” the motion to compel arbitration and stay action reads. The Hoffmans, however, counter that TILA prohibits mandatory arbitration clauses in residential mortgage agreements.

The litigation adds to ongoing scrutiny from the Massachusetts attorney general, who has separately alleged that Hometap’s products are illegal, high-interest mortgages.

National Mortgage News first reported on the four separate pieces of litigation that Hometap is facing in 2026 alone.

Other class actions

Another of the four suits, filed in February by New Jersey homeowners Ryan Billey and Keicha Greenidge, alleges Hometap advanced about $98,000 in exchange for a 10-year agreement tied to 13% of their home’s appraised value without evaluating their income or ability to repay.

Billey and Greenidge allege that they were unaware that settling the agreement within its 10-year term could require them to repay Hometap up to twice the amount they received. Under the contract, repayment is triggered by events including the sale of the home, a default on property taxes or insurance, the homeowner’s death or the expiration of the agreement.

The plaintiffs claim they would owe roughly $177,000 to $199,000 based on their home’s current estimated value of about $800,000, which they allege exceeds New Jersey’s legal interest rate limits.

“Plaintiffs will be forced to pay Hometap roughly a third of the value of their home subject to an ‘annualized rate of return’ cap of between 17.936% and 21.523% annual compound interest,” the suit states.

As requested in their class action, Billey and Greenidge “respectfully ask the Court to issue an injunction ordering defendants to cease using their Option Purchase Agreements.”

In a separate complaint filed in May in Pennsylvania by plaintiffs Roberta and John Ruane, the borrowers say Hometap “acted in bad faith and with intent to defraud,” and that the company “never revealed to Plaintiffs and Class members that an HEI was actually a predatory high-interest loan that was carefully crafted with illusory contract language to avoid regulation.”

The Ruanes also allege that upon entering the HEI contract, they would have owed Hometap 15.845% of their home’s value, or $64,964.50, to exit the agreement. That’s in addition to closing costs, an amount totaling about 67% more than their original investment.

Based on the home’s current estimated value of $571,600, the plaintiffs would owe $90,570.02 to pay off and exit the contract today, plus closing costs. That figure is about 132% higher than the initial investment amount.

At the projected 10-year appreciation rate, the home could be worth $797,000. If Hometap exercised its option at that point, the plaintiffs would owe $126,284.65, excluding closing costs, or roughly 224% more than the original investment.

HEIs under scrutiny

Like Hometap, other home equity investment providers like Unison Agreement Corp. have come under fire over allegedly deceptive practices.

In June, two additional plaintiffs joined a federal class-action lawsuit in Colorado against Unison and affiliates. The original suit, filed in April of this year, alleges Unison misled borrowers by marketing its agreements as debt-free financing.

A separate class-action suit filed earlier this year in California alleges the company uses equity-sharing contracts that function as unlicensed, high-interest mortgages disguised as investment partnerships.

In a related case, the Ninth Circuit Court of Appeals ruled last year in Olson v. Unison that the company’s product operated as a reverse mortgage under Washington state law and involved deceptive marketing practices, although the matter was later settled.