State blocks key Hometap defenses in Massachusetts HEI lawsuit
A Massachusetts mediate has barred home equity contract provider Hometap from arguing that hiss regulators beforehand permitted or implicitly sanctioned the firm’s business model — strengthening the attorney traditional’s person safety lawsuit against Hometap.
In a Dec. 19 decision, Suffolk County Superior Courtroom State Debra Squires-Lee ruled that such equity-essentially essentially based arguments cannot be extinct to block law enforcement circulation brought about behalf of the public.
The hiss alleges that Hometap’s flagship home equity funding (HEI) product is an “unlawful, pretend, oppressive and unconscionable mortgage that violates the prison usury statute.”
Squires-Lee’s ruling formulation that Hometap cannot argue that earlier interactions with hiss regulators — including conferences wherein the firm says it described its product and became now not told to cease — cease the AG from pursuing the case.
The case itself is persevering with, with the courtroom allowing restricted discovery linked to what Hometap became told by regulators — nonetheless this would maybe now not grant secure entry to to inner executive deliberations.
Insist alleges predatory practices
The litigation, filed in February 2025 by Massachusetts Prison first payment General Andrea Pleasure Campbell, accuses Hometap of standard violations of hiss person safety statutes, including mortgage and foreclosures prevention licensed guidelines.
The complaint alleges the firm “pervasively and systematically violated the hiss’s person safety licensed guidelines, including mortgage and foreclosures prevention licensed guidelines, striking financially inclined householders at high risk of shedding their homes.”
On the heart of the case are Hometap’s HEIs. In switch for what the firm markets as “debt-free money,” householders comply with give Hometap a part of their home’s future label.
Insist officials argue these preparations are doubtless to be now not merely investments, nonetheless rather “unlawful reverse mortgages that fail to follow hiss person safety licensed guidelines.”
Campbell said the firm’s practices target householders with restricted financial alternatives.
“Amidst a increasing affordability disaster, our lawsuit alleges that Hometap deliberately preyed upon financially inclined householders for profit, stripping them of their richly deserved home equity and striking them at unreasonably high risk of foreclosures,” Campbell said when saying the suit.
‘Unlawful reverse mortgage’ express
Hometap maintains that its HEIs are investments, now not loans.
The attorney traditional’s space of job disagrees, pointing to aspects it says replicate reverse mortgages.
Unlike federally insured reverse mortgages — which require borrowers to be no now not as a lot as 62 years dilapidated — and a spread of proprietary products with a minimum age of 55, Hometap’s products build now not need any age requirement.
Massachusetts law restricts reverse mortgages to borrowers who’re now not any now not as a lot as 60. The hiss additionally requires protections such as a seven-day cancellation length and necessary third-secure collectively counseling.
Because Hometap doesn’t observe these solutions, buyers are deprived of safeguards supposed to cease foreclosures and the shortcoming of a home, the hiss argues.
Hometap has called the lawsuit baseless.
“Hometap firmly believes within the integrity of our products and the financial flexibility they offer to Massachusetts householders,” the firm beforehand told HousingWire‘s Reverse Mortgage Each day. “We like pursued every doubtless avenue to love interplay in positive dialogue with the Massachusetts attorney traditional’s space of job. Unfortunately, these efforts have not been reciprocated, and we predict about they’re pursuing an fraudulent lawsuit predicated on meritless claims.”
The Massachusetts case continues as home equity contracts face mounting scrutiny nationwide.
A Washington hiss lawsuit over whether or now not home equity investments are disguised as reverse mortgages ended with a settlement in October after a Ninth Circuit Courtroom of Appeals panel ruled that Unison’s product qualified as a reverse mortgage.
The same lawsuits against HEI suppliers are pending in Colorado and Unusual York.
