A Massachusetts judge has barred home equity contract provider Hometap from arguing that state regulators previously approved or implicitly sanctioned the company’s business model — strengthening the attorney general’s consumer protection lawsuit against Hometap.
In a Dec. 19 decision, Suffolk County Superior Court Judge Debra Squires-Lee ruled that such fairness-based arguments cannot be used to block law enforcement action brought on behalf of the public.
The state alleges that Hometap’s flagship home equity investment (HEI) product is an “illegal, deceptive, oppressive and unconscionable mortgage that violates the criminal usury statute.”
Squires-Lee’s ruling means that Hometap cannot argue that earlier interactions with state regulators — including meetings in which the company says it described its product and was not told to stop — prevent the AG from pursuing the case.
The case itself is continuing, with the court allowing limited discovery related to what Hometap was told by regulators — but it will not grant access to internal government deliberations.
State alleges predatory practices
The litigation, filed in February 2025 by Massachusetts Attorney General Andrea Joy Campbell, accuses Hometap of widespread violations of state consumer protection statutes, including mortgage and foreclosure prevention laws.
The complaint alleges the company “pervasively and systematically violated the state’s consumer protection laws, including mortgage and foreclosure prevention laws, putting financially vulnerable homeowners at high risk of losing their homes.”
At the center of the case are Hometap’s HEIs. In exchange for what the company markets as “debt-free cash,” homeowners agree to give Hometap a share of their home’s future value.
State officials argue these arrangements are not true investments, but rather “illegal reverse mortgages that fail to comply with state consumer protection laws.”
Campbell said the company’s practices target homeowners with limited financial options.
“Amidst a growing affordability crisis, our lawsuit alleges that Hometap deliberately preyed upon financially vulnerable homeowners for profit, stripping them of their hard-earned home equity and putting them at unreasonably high risk of foreclosure,” Campbell said when announcing the suit.
‘Illegal reverse mortgage’ claim
Hometap maintains that its HEIs are investments, not loans.
The attorney general’s office disagrees, pointing to features it says mirror reverse mortgages.
Unlike federally insured reverse mortgages — which require borrowers to be at least 62 years old — and many proprietary products with a minimum age of 55, Hometap’s products have no age requirement.
Massachusetts law restricts reverse mortgages to borrowers who are at least 60. The state also requires protections such as a seven-day cancellation period and mandatory third-party counseling.
Because Hometap does not follow these rules, consumers are deprived of safeguards meant to prevent foreclosure and the loss of a home, the state argues.
Hometap has called the lawsuit baseless.
“Hometap firmly believes in the integrity of our products and the financial flexibility they provide to Massachusetts homeowners,” the company previously told HousingWire‘s Reverse Mortgage Daily. “We have pursued every possible avenue to engage in constructive dialogue with the Massachusetts attorney general’s office. Unfortunately, those efforts have not been reciprocated, and we believe they are pursuing an unfounded lawsuit predicated on meritless claims.”
The Massachusetts case continues as home equity contracts face mounting scrutiny nationwide.
A Washington state lawsuit over whether home equity investments are disguised as reverse mortgages ended with a settlement in October after a Ninth Circuit Court of Appeals panel ruled that Unison’s product qualified as a reverse mortgage.
Similar lawsuits against HEI providers are pending in Colorado and New York.