When I was on the buying side of real estate, the deals that closed fastest were the ones nobody slowed down to read.
That is not a knock on those families. It is how the whole thing is engineered. A pitch that sounds like free money makes people relax, and a relaxed person signs. I spent eight years buying and flipping houses, and I watched that pattern over and over. So when I started seeing a product marketed to older homeowners with the words no debt and no monthly payment, my stomach dropped a little. Because those are the exact words that make a person stop asking questions.
The product is called a home equity investment. You may also hear it called a home equity agreement or a shared equity agreement. And starting in 2025, courts and state attorneys general began treating some of these deals as something very different from what the marketing says they are. In 2026 the pressure has only intensified.
What a home equity investment actually is
Here is the plain version. A company gives your parents a lump of cash today. In exchange, the company gets a share of the home's value in the future. There is no monthly payment. Nothing comes due until a trigger event: your parents sell the house, refinance it, reach the end of the contract term, or pass away.
That sounds gentle. No payment, cash in hand, and you keep living in your home. For an equity-rich senior on a fixed income, it can feel like the answer to a cash-flow problem.
The catch is in that word future. When the trigger event hits, the company does not just want its cash back. It wants its agreed share of what the home is worth at that point. On a house that has gone up in value, that share can be far larger than the money your parents received. Families who did the math after the fact have found they owed two or three times the original cash, sometimes more, because the home appreciated and the company's slice grew right along with it.
The companies that sell these products say they are not loans. They say there is no interest and no debt, just a shared bet on the home's value. That distinction matters, because loans come with a stack of federal and state consumer protections, and if these products are not loans, those protections may not apply.
What changed in 2025 and 2026
This is where the news comes in, and why this is worth your attention right now.
Courts have started disagreeing with the not a loan framing. The National Consumer Law Center, a group that has studied predatory lending for decades, has documented a string of cases where judges looked at these contracts and concluded they function like loans, specifically like reverse mortgages.
A federal appeals court, the Ninth Circuit, ruled that one company's home equity investment product was a reverse mortgage under Washington state law, and let the homeowners' claims that the marketing was deceptive go forward. That company, Unison, reportedly settled that particular case, and it now faces a separate challenge from a national consumer advocates group, with AARP Foundation as co-counsel, over how it markets the product.
In Massachusetts, the state attorney general sued a company called Hometap, alleging its product is an illegal reverse mortgage. That case is moving through discovery. And in late June 2026, a new class action was filed in California accusing Hometap of violating the Truth in Lending Act, the federal law that governs loans, on the theory that the contract is really a loan dressed up as an investment.
I want to be fair here, because accuracy is the whole job. The companies deny they are doing anything wrong. These cases are not finished, and a lawsuit is an allegation, not a verdict. Not every one of these products is a scam, and some homeowners may genuinely prefer them to the alternatives. But when appeals courts and attorneys general in multiple states start calling a product a reverse mortgage in disguise, that is a loud signal that families should read the fine print before they sign, not after.
Why paid-off senior homes are the target
Follow the incentive and you understand the marketing. These products work best for the company when the home is likely to appreciate a lot and the owner has a lot of equity to draw from.
That describes a huge number of older homeowners. Someone who bought a house decades ago, paid it off, and watched the neighborhood value climb is sitting on exactly the kind of equity these products are designed to tap. The homeowner needs cash, cannot easily qualify for a traditional second mortgage on a fixed income, and gets pitched a deal with no monthly payment. It fits together a little too neatly.
I saw the same logic on the buying side. The free-and-clear house owned by someone in their seventies or eighties was always the prize, because there was no bank in the middle watching the transaction and a lot of value to work with. The players change, but the target does not.
What Medicare does not cover has nothing to do with this, and everything to do with it
Here is a connection families miss. A lot of people reach for a home equity product because they are staring down a care bill, and Medicare will not pay it. Medicare does not cover long term custodial care, the daily help with bathing, dressing, and meals that a parent may need for years. When that bill lands, families look at the house, because the house is where the money is.
That is a real problem and I am not going to pretend the equity in the home is off limits. Sometimes tapping it is the right call. But the answer to a care-cost problem is not to grab the first product that offers cash with no payment. It is to look at every option first: a plain home equity line of credit, a traditional FHA reverse mortgage that at least requires HUD counseling before you sign, selling and downsizing, or a Medicaid plan built with an elder law attorney. The home equity investment should be compared against all of those, not signed because it showed up first and sounded easy.
How families protect themselves
You do not need to become an expert in shared equity contracts. You need a few simple rules that hold up no matter what product walks in the door.
Treat any home equity deal like a mortgage, because it might be one
If a pitch involves your parents' home and any amount of money, slow down and treat it with mortgage-level seriousness. That means paperwork, questions, and a professional set of eyes. The fact that a company calls it an investment instead of a loan does not change how much is at stake.
Never sign the same day
This is the single most protective habit I know. Every rushed deal I ever saw depended on a signature happening before the person could think or call anyone. A legitimate offer will still be there tomorrow. If someone pressures your parents to sign today, that pressure is the warning.
Get the answer to one question in writing
Ask the company, in writing: what will we owe if the home doubles in value, and what happens when we sell or when the owner passes away. Make them put the number in front of you as a real scenario. If they dodge, that tells you something.
Have a lawyer read it before anyone signs
A real estate or elder law attorney can read a home equity agreement in an hour and tell your parents what they are actually agreeing to. That fee is nothing compared to a share of the whole house. This is the step that catches the trap.
Compare it to the boring options
Before your parents sign anything, put the deal next to a plain HELOC and a HUD-counseled reverse mortgage. Sometimes the boring option is cheaper and safer. Boring beats broke.
Where I fit
People ask what I actually do, so here it is plain. I am not here to sell your parents a product or list their house. I sell information and tools, and my only job is making sure every option is in front of a family before anyone signs anything. If a home equity pitch shows up, I will tell you what I would tell my own mom: slow down, read it, and let a professional look before you commit. If selling really is the right move, I will point you to the right person for your situation. If it is not, I will tell you that too, even when the answer is do nothing yet.
I came off the side of the business that profited from families moving too fast. That is exactly why I will never rush you.
Frequently Asked Questions
What is a home equity investment?
It is an agreement where a company gives a homeowner cash today in exchange for a share of the home's future value. There is no monthly payment. The company collects its share when the home is sold or refinanced, at the end of the contract term, or when the owner passes away.
Is a home equity investment a loan?
The companies say no, that there is no interest and no debt. But since 2025, courts in more than one state have ruled that some of these products function as loans, specifically as reverse mortgages, and attorneys general have sued over the marketing. The legal question is still being decided.
How is this different from a reverse mortgage?
A traditional reverse mortgage is a federally regulated FHA loan for homeowners 62 and older, and it requires HUD-approved counseling before you can sign. Many home equity investment products are marketed as not loans, which can mean they skip that counseling and other loan protections. That is a large part of why they are being challenged in court.
Why do these companies target older homeowners?
The products work best when a home has a lot of equity and is likely to keep rising in value. Many older homeowners own their homes free and clear and need cash but cannot easily qualify for a traditional second mortgage, which makes them the ideal customer for a no-monthly-payment pitch.
What should my parents do if they are offered one?
Do not sign the same day. Ask in writing what they will owe if the home rises in value and what happens at a sale or death. Have a real estate or elder law attorney read the agreement before anyone signs, and compare the offer against a plain home equity line of credit and a HUD-counseled reverse mortgage.
About Ryan Riggins
Ryan Riggins is a senior transition advisor and former house flipper. After 8+ years buying homes from families in transition, he walked away from the cash-buyer side to help families avoid the $50K mistakes he used to profit from. Based in Greensboro, NC. NC Real Estate License #361546, eXp Realty. Founder of Riggins Strategic Solutions and the SeniorSafe app.
See the 7 ways to sell or tap a senior's home, so you can compare any pitch: rigginsstrategicsolutions.com/tools/strategic-exit-engine
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Ryan Riggins is the founder of Riggins Strategic Solutions, a consumer protection company for families navigating senior transitions. He spent 8 years in construction project management and house flipping before switching sides. Two books on Amazon. Free resources at rigginsstrategicsolutions.com.
