Why Pennsylvania is moving to regulate firms offering home equity investments

Wendy Gilch wasn’t looking for a new financial threat lurking in the housing market when she opened TikTok.

The Franklin Park consumer advocate was researching a completely different problem: companies she believed were violating the Federal Trade Commission’s advertising rules with fake testimonials, AI-generated personas and influencers endorsing products they don’t really use.

But as she scrolled through video after video, something strange kept popping up in her feed.

The same people were appearing in ads for different companies offering something called a “Home Equity Investment” - a little-known financial product that promised homeowners fast cash with no monthly payments and no interest rate.

“And I started wondering - what are these products?” Gilch said.

What she discovered alarmed her enough to contact state lawmakers.

The companies - including Unison, Point, Hometap, Unlock and Splitero - offered homeowners upfront cash in exchange for a slice of their future home equity. Because the agreements are not legally classified as loans, the industry largely operates outside of Pennsylvania banking regulations and disclosure requirements that govern traditional home equity lending.

“These products aren’t considered loans,” Gilch said. “They’re not written in our laws. They’re in this weird gray area, so there’s many [banking] rules and consumer protections that don’t apply.”

‘Essentially marketed as free money’

Home equity investment industry representatives told the Post-Gazette they are not opposed to oversight, and they argue that their product is fundamentally different from traditional lending products and therefore require a separate regulatory framework.

Homeowners receive cash upfront, they said, which gives the companies a shared equity stake in the house. The company’s equity stake grows over time as the home value appreciates.

Like traditional mortgages, home equity investment contracts are also packaged and resold on the secondary market, creating another revenue stream tied to homeowners’ future appreciation.

Consumer advocate Wendy Gilch on home equity investments: “They’re not written in our laws. They’re in this weird gray area, so there’s many [banking] rules and consumer protections that don’t apply.” (Post-Gazette)

Cliff Andrews, president of the Coalition for Home Equity Partnerships in Manassas, Va., said applying banking rules designed for loans does not fit a product that carries no monthly payment and no interest rate.

“Any regulation or law that would say you need to have an APR, we fundamentally just can’t calculate such a number,” he said.

Gilch’s concerns with the practice eventually landed before state Rep. Arvind Venkat, D-McCandless, who has since introduced legislation aimed at placing guardrails around the fast-growing industry before more Pennsylvania homeowners sign agreements that could potentially jeopardize their equity.

Andrews said he estimates about 4,000 Pennsylvania residents currently are customers.

Venkat said he had never heard of shared equity agreements before Gilch brought them to his attention.

“The more I dug into it, the more I realized the dangers of these products,” Venkat said. “They’re essentially marketed as free money, which should always be a warning sign.”

Venkat introduced House Bill 2120, legislation that would place home equity investment companies under the authority of the state banking department and subject them to regulations similar to those governing traditional lenders.

The bill recently cleared committee and is scheduled for a vote before the full Pennsylvania House on June 1.

‘How much you owe just gets bigger and bigger’

Representatives from four of the home equity investment industry’s biggest players appeared before the House Commerce Committee at a hearing in Harrisburg in March to defend a business model they insisted should not be regulated like a traditional lender.

Also in the room were consumer advocates, non-profit attorneys - and Gilch.

Industry representatives argued that home equity investments fill a gap for homeowners who either cannot qualify for traditional lending products or who want access to cash without taking on another monthly payment.

“So, the shared equity product fills that gap in a need for those types of consumers,” Andrews said. “Oftentimes, homeowners have an immediate need.”

According to Andrews, the most common use for the money is credit card debt elimination. Homeowners also use the funds for home renovations, medical expenses, education costs and investments in small businesses, he said.

But when lawmakers pressed the industry executives with a simple question - how much would a homeowner who received a $50,000 payout ultimately owe after 10 years? - none could provide a straightforward answer.

The reason, they explained, was that repayment depends on the future appraised value of the home.

For critics in the room, that uncertainty is exactly the problem.

“It’s a confusing product because it’s based on future equity,” said Gilch, founder of the consumer watchdog website Selling Later. “They claim they send out quarterly statements so people can see how much they owe. But how much you owe just gets bigger and bigger and bigger.

“And eventually,” she said, “you can’t pay it back. You have to take out another loan or sell your house.”

A niche market that continues to expand

The companies, however, insisted that customers are satisfied with the arrangements, and they submitted glowing client testimonials to lawmakers as part of their defense.

But there was a complication.

Just days before the hearing, one Pennsylvania homeowner in a contract with Point forwarded Venkat an email she had received from the company offering its customers a $50 Amazon gift card in exchange for writing positive online reviews about the product.

That homeowner - a 60-year-old woman from Bucks County - told lawmakers she accepted a $225,000 cash advance in September 2021 without fully understanding how much of her future home value she was signing away.

Under the company’s valuation formula and contract terms, she said, Point is positioned to ultimately collect roughly 58% of her home equity at the end of the agreement.

“You sell your soul to the devil at the end,” she said. “And I don’t say that phrase lightly.”

For now, the home equity investment market remains relatively small.

The federal Consumer Financial Protection Bureau has estimated the industry at roughly $2 billion to $3 billion nationwide - small compared to the traditional home equity lending market, but substantial for a niche market that continues to expand since gaining traction around 2019.

The Pennsylvania legislation is in motion at the same time that lawmakers across the country are beginning to scrutinize the industry and figure out how to regulate a product that doesn’t fit neatly into existing laws.

‘This is very dangerous’

Maine is one state that has already taken action.

In April 2026, Gov. Janet Mills signed LD 1901 into law, creating specific consumer protections for home equity investment products, which the state treats as “shared appreciation mortgage loans.”

The Maine law requires additional disclosures, housing counseling and independent legal counsel, while restricting certain contract terms critics say can trap homeowners.

Illinois took a somewhat different approach last year when lawmakers amended the state’s Residential Mortgage License Act to explicitly include “shared appreciation agreements,” which effectively treat home equity investments as mortgage products subject to licensing and state oversight.

Rather than forcing the products into existing lending statues unchanged, Illinois tailored the law around how the agreements actually work. The law also included mortgage-style protections such as licensing requirements for providers, disclosure rules, third-party appraisals, and restrictions on short-term balloon repayments.

Pennsylvania lawmakers are seeking to classify shared-equity contracts as residential mortgages.

“Homeowners receive a chunk of money, but then don’t realize they are going to owe a huge amount of money at the end of the the term of the contract,” Venkat said, adding that companies earn almost a 20% annualized return on capital.

That kind of rate of return, he said, is far beyond what Pennsylvania allows for home-secured financial instruments like mortgages,

“We have an anti-usury law that caps it at like 6.5% or 7%,” Venkat said. “This is very dangerous. We’ve heard from Pennsylvanians who’ve signed these contracts and now feel very exploited as a result of that.”

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This story was originally published May 25, 2026 at 8:14 AM.