Available in the following formats:
Government agency
Primary source type
Issued:
Date
2025
Description
This January 2025 CFPB market overview examines home equity contracts—often called home equity “investments” (HEIs), a relatively new financial product in which homeowners get an upfront payment and, in exchange, must repay a single lump-sum repayment in the future that is based, in part, on the home’s value. Key findings include:
- Consumers primarily use home equity contracts for debt consolidation and home improvements, though some consumers have reported that they use the funds for real estate investing or savings for or during retirement.
- Home equity contracts are often marketed as an alternative to a cash-out refinance, home equity line of credit (HELOC), or traditional reverse mortgage loan, like a federally insured home equity conversion mortgage (HECM).
- The industry is small but has expanded in recent years, driven in part by an emerging secondary market for securitizations.
- Homeowners must repay a home equity contract with a single payment—the amount of which can be difficult to predict and can run in the hundreds of thousands of dollars.
- Consumers could be forced to sell their homes to pay off the contracts.
