Hometap Lawsuit: Massachusetts Claims, NJ Class Action, and Rulings

The Hometap lawsuit is actually two lawsuits: a February 2025 enforcement action by Massachusetts Attorney General Andrea Joy Campbell and a February 2026 federal class action filed in New Jersey. Both allege that Hometap Equity Partners’ home equity investment product is not really an investment at all, but a predatory reverse mortgage loan sold without the disclosures, underwriting, and consumer protections that mortgage law requires. Early rulings in Massachusetts have gone against the company, and the case now sits in discovery.

What Massachusetts Alleges

AG Campbell filed Commonwealth v. Hometap Equity Partners, LLC in Suffolk County Superior Court on February 20, 2025, calling it a “first-in-the-nation” enforcement action. The state’s central theory is that Hometap’s product functions as a reverse mortgage: the homeowner receives a lump sum of cash up front, owes no monthly payments, and must repay a much larger sum within ten years or sell the home. Because that repayment is secured by the borrower’s primary residence, the AG argues, it is a loan under Massachusetts law and had to comply with the state’s reverse mortgage rules, including a minimum age for borrowers, mandatory third-party counseling, and a seven-day cancellation window.¹

The complaint describes several specific practices the state considers unfair, deceptive, or unlawful:

Buying equity at roughly half price. The AG alleges Hometap acquires a stake in the home’s future value up to twice the cash it pays the homeowner. In one example, a homeowner who received $100,000 could owe more than $311,000, even though marketing materials suggested a cost closer to $155,000.¹
Charging effective returns that exceed the state’s 20 percent criminal usury cap once fees, equity devaluation adjustments, and the compounding “Hometap Cap” are combined.²
No underwriting. Hometap does not evaluate income, employment, or ability to make the eventual lump-sum payment, a practice the AG compares to pre-2008 “no-doc” subprime lending.²
Targeting “house rich, cash poor” consumers, including elderly homeowners, retirees, and people with subprime or deep subprime credit scores.²
Marketing the product as “no interest,” “no income requirements,” and shared-risk when internal documents cited in the complaint show a home would have to lose 25 percent of its value before Hometap’s principal is at any real risk.²

The state says Hometap entered into 563 of these agreements with Massachusetts homeowners beginning in late 2018. It seeks an injunction, restitution, disgorgement of profits, and civil penalties.²

One feature of the case is worth noting up front. None of Hometap’s ten-year contracts have reached their end, and no Massachusetts homeowner has been foreclosed on under one. The AG’s theory is forward-looking: it argues the balloon-payment structure creates an “unreasonably high risk” of future foreclosures and calls the product a “ticking time bomb.”¹

What the Courts Have Ruled So Far

Two rulings in the Massachusetts case have gone against Hometap.

Motion to Dismiss Denied

On August 21, 2025, the Suffolk County Superior Court denied Hometap’s motion to dismiss in full. The judge found it plausible that the product is a loan rather than an investment or option contract, focusing on the substance of the deal instead of its labels. The court found Hometap faced “no substantial risk” of losing its principal and never intended to become a genuine co-owner of the properties involved. Because the company advanced money that had to be repaid, whether by lump sum or forced sale, the arrangement functioned as a loan.³

The court also rejected Hometap’s reliance on federal Truth in Lending Act commentary that exempts certain investment contracts, reasoning that those exemptions assume a real risk of loss the Hometap product does not carry. All five counts survived: illegal mortgage lending, criminal usury, deceptive marketing, failure to provide required loan disclosures, and unfairness and unconscionability.⁴

Equitable Defenses Struck

In December 2025, Justice Debra A. Squires-Lee struck two of Hometap’s affirmative defenses: equitable estoppel and unclean hands. Hometap had argued that the Massachusetts Division of Banks previously told the company home equity investments were “distinct from loans” and outside the agency’s regulatory authority, and that the state should therefore be barred from suing over conduct regulators had effectively permitted.⁵

The court held that equitable defenses are “legally impermissible” in a consumer protection enforcement action brought by the Attorney General, because allowing them would “frustrate a policy intended to protect the public interest.” Hometap can still introduce its prior communications with regulators to argue it did not know its conduct was unlawful, which may affect the size of any civil penalties.⁵

Where the Case Stands

As of mid-2026, the case is in discovery. The parties obtained a protective order in October 2025 and settled electronic records protocols in December 2025. A status conference is expected in late 2026. No trial date has been set, and no settlement discussions have been reported.⁶

The New Jersey Class Action

On February 12, 2026, lead plaintiffs Keicha Greenidge and Ryan P. Billey filed a proposed class action in the U.S. District Court for the District of New Jersey, Greenidge et al. v. Hometap Equity Partners, LLC et al., No. 3:26-cv-01431. The case was assigned to Judge Georgette Castner.⁷

The complaint tracks the Massachusetts theory but frames it federally. It alleges Hometap’s “Option Purchase Agreements” are predatory mortgage loans in disguise, and that despite the “THIS IS NOT A LOAN” stamp on its paperwork, some of the company’s own contractual materials use the word “loan” to describe the product.⁸

The claims include violations of the federal Truth in Lending Act (missing disclosures, no ability-to-repay assessment, and mandatory arbitration clauses that TILA prohibits in mortgage contracts), the New Jersey Consumer Fraud Act, the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act, and the New Jersey Home Ownership Security Act of 2002.⁹

The named plaintiffs say they signed with Hometap during a period of job loss and health problems in an effort to save their home, and that they did not understand the agreement could force a sale within ten years. The complaint alleges that when a contract matures, Hometap can foreclose or compel a sale, and that transaction costs leave homeowners with too little equity to find new housing.⁹

The proposed class covers everyone who entered a Hometap option purchase agreement in the last three years for the TILA claims, and the last six years for the New Jersey claims. Plaintiffs seek rescission of the contracts, removal of Hometap’s mortgage liens, restitution of payments made, and statutory and punitive damages.⁹

Hometap’s Response

Hometap denies the allegations in both cases. Its core legal position is that the product is an options contract, not a loan, and does not meet the legal definition of a mortgage or reverse mortgage. In its motion to dismiss, the company argued the state had failed to identify any deceptive or unfair conduct.¹⁰

Hometap has also emphasized its regulatory history. Court filings say the company met with both the AG’s Office and the Division of Banks starting in 2018 to walk through its product, that neither agency raised concerns, and that the Division of Banks publicly stated home equity investments were “distinct from loans” and outside its regulatory authority. Hometap has called the current suit “irreconcilably inconsistent” with that earlier position.⁵

Publicly, the company said it “firmly believes in the integrity of our products and the financial flexibility they provide to Massachusetts homeowners” and described the AG’s action as “an unfounded lawsuit predicated on meritless claims.” After losing the motion to dismiss, Hometap said it looked forward to discovery and expected to “introduce facts that further reinforce the strength of our position.”¹⁰

The Wider Legal Fight Over Home Equity Investments

The Hometap cases are the most prominent piece of a broader legal shift. Other courts have reached similar conclusions about competing products. In Olson v. Unison Agreement Corp., the Ninth Circuit ruled in August 2025 that Unison’s product was a “reverse mortgage loan” under Washington law, finding the “entire structure” of the deal amounted to a shared-appreciation reverse mortgage. That ruling was later vacated after the parties settled and dismissed the appeal in October 2025, leaving the lower court judgment in place.³¹¹

In December 2025, an Arizona state court in Muskal v. Point Digital Finance denied a motion to compel arbitration, holding the home equity product at issue was “credit” subject to TILA, which bars mandatory arbitration in mortgage contracts.³

The federal picture is less settled. The Consumer Financial Protection Bureau issued a January 2025 consumer advisory warning that home equity contracts are “costly, risky and complex” and filed an amicus brief in a New Jersey case arguing the products are “residential mortgage loans” under TILA. After a change in leadership, the CFPB withdrew that amicus brief in February 2025 and said it was reconsidering its position.¹²¹³

States are moving faster than Washington. Maine became the first state to enact a home-equity-investment-specific law in April 2026, classifying the products as “shared appreciation mortgage loans” and requiring cost disclosures, housing counseling, and legal representation. Connecticut, Illinois, and Maryland have passed similar laws, and Massachusetts, Pennsylvania, and Washington have bills pending.¹⁴

Hometap, founded in 2017 and headquartered in Boston, has deployed more than $2.3 billion to over 22,000 homeowners nationwide, and the CFPB counts it among the four largest companies in the home equity investment market alongside Unison, Point, and Unlock.¹² The outcome of its Massachusetts and New Jersey cases will shape how the whole industry is regulated.

1
Mass.gov. AG Campbell Files Nation-Leading State Enforcement Action Against Home Equity Investment Company
2
Wolters Kluwer. Hometap Equity Partners Complaint
3
National Consumer Law Center. Courts Expose Deception of Home Equity Investments
4
Orrick. Massachusetts State Court Allows Consumer Protection Suit Over Home Equity Investment Product to Proceed
5
Massachusetts Lawyers Weekly. Commonwealth v. Hometap Equity Partners Decision and Order
6
HEL News. HEI Lawsuits
7
Law360. Greenidge et al v. Hometap Equity Partners LLC et al
8
ClassAction.org. Class Action Lawsuit Alleges Misbranded Hometap HEI Loans Are Predatory, Illegal
9
ClassAction.org. Hometap Equity Partners Complaint
10
National Mortgage News. HEI Provider Hometap Sees Setback in Massachusetts Lawsuit
11
PACER Monitor. Olson et al v. Unison Agreement Corporation
12
Consumer Financial Protection Bureau. Issue Spotlight: Home Equity Contracts Market Overview
13
Orrick. CFPB Motion to Withdraw Amicus Brief
14
National Consumer Law Center. Maine Governor Signs First-in-the-Nation Law to Protect Homeowners From Home Equity Investment Loans