A fast-growing home equity financing model that promises homeowners cash without monthly payments is facing mounting scrutiny from state lawmakers — and the industry behind it is mobilizing to shape the outcome.

In Pennsylvania, House Bill 2120 would classify shared equity contracts — often marketed as home equity investments (HEIs), shared appreciation agreements or home equity agreements — as residential mortgages under state law.

While the proposal is still in committee, the debate unfolding in Harrisburg reflects a broader national effort to determine whether these products are truly a new category of equity-based investment — or if they function as mortgages and belong under existing consumer lending laws.

A classification fight over home equity capture

HB 2120 would amend Pennsylvania’s Loan Interest and Protection Law by explicitly including shared appreciation agreements in the residential mortgage definition. If passed, shared equity contracts would be subject to the same interest caps, licensing standards and consumer protections that apply to traditional mortgage lending.

The legislation was introduced by Rep. Arvind Venkat after constituent Wendy Gilch — a fellow with the consumer watchdog Consumer Policy Center — brought concerns to his office. Gilch has since worked with Venkat as a partner in shaping the proposal.

Gilch initially began examining the products after seeing advertisements describe them as offering cash with “no debt,” “no interest” and “no monthly payments.”

“It sounds like free money,” she said. “But in many cases, you’re giving up a growing share of your home’s equity over time.”

Breaking down the debate

Shared equity providers (SEPs) argue that their products are not loans. Instead of charging interest or requiring monthly payments, companies provide homeowners with a lump sum in exchange for a share of the home’s future appreciation, which is typically repaid when the home is sold or refinanced.

The Coalition for Home Equity Partnership (CHEP) — an industry-led group founded in 2025 by Hometap, Point and Unlock — emphasizes that shared equity products have zero monthly payments or interest, no minimum income requirements and no personal liability if a home’s value declines.

Venkat, however, argues that the mechanics look familiar and argues that “transactions secured by homes should include transparency and consumer protections” — especially since, for many many Americans, their home is their most valuable asset. 

“These agreements involve appraisals, liens, closing costs and defined repayment triggers,” he said. “If it looks like a mortgage and functions like a mortgage, it should be treated like one.”

The bill sits within Pennsylvania’s anti-usury framework, which caps returns on home-secured lending in the mid-single digits. Venkat said he’s been told by industry representatives that they require returns approaching 18-20% to make the model viable — particularly if contracts are later resold to outside investors. According to CHEP, its members provide scenario-based disclosures showing potential outcomes under varying assumptions, with the final cost depending on future home values and term length.

In a statement shared with Real Estate News, CHEP President Cliff Andrews said the group supports comprehensive regulation of shared equity products but argues that automatically classifying them as mortgages applies a framework “that was never designed for, and cannot meaningfully be applied to, equity-based financing instruments.”

As currently drafted, HB 2120 would function as a “de facto ban” on shared equity products in Pennsylvania, Andrews added.

Real Estate News also reached out to Unison, a major vendor in the space, for comment on HB 2120. Hometap and Unlock deferred to CHEP when reached for comment. 

A growing regulatory patchwork

Pennsylvania is not alone in seeking to legislate regulations around HEIs. Maryland, Illinois and Connecticut have also taken steps to clarify that certain home equity option agreements fall under mortgage lending statutes and licensing requirements.

In Washington state, litigation over whether a shared equity contract qualified as a reverse mortgage reached the Ninth Circuit before the case was settled and the opinion vacated. Maine and Oregon have considered similar proposals, while Massachusetts has pursued enforcement action against at least one provider in connection with home equity investment practices.

Taken together, these developments suggest a state-by-state regulatory patchwork could emerge in the absence of a uniform federal framework.

The push for homeowner protections

The debate over HEIs arrives amid elevated interest rates and reduced refinancing activity — conditions that have increased demand for alternative equity-access products. 

But regulators appear increasingly focused on classification — specifically whether the absence of monthly payments and traditional interest charges changes the legal character of a contract secured by a lien on a home.

Gilch argues that classification is central to consumer clarity. “If it’s secured by your home and you have to settle up when you sell or refinance, homeowners should have the same protections they expect with any other home-based transaction,” she said.

Lessons from prior home equity controversies

For industry leaders, the regulatory scrutiny may feel familiar. In recent years, unconventional home equity models have drawn enforcement actions and litigation once questions surfaced around contract structure, title encumbrances or consumer understanding.

MV Realty, which offered upfront payments in exchange for long-term listing agreements, faced regulatory action in multiple states over how those agreements were recorded and disclosed. EasyKnock, which structured sale-leaseback transactions aimed at unlocking home equity, abruptly shuttered operations in late 2024 following litigation and mounting regulatory pressure.

Shared equity investment contracts differ structurally from both models, but those episodes underscore a broader pattern: novel housing finance products can scale quickly in tight credit cycles. Just as quickly, these home equity models encounter regulatory intervention once policymakers begin examining how they fit within existing law — and the formation of CHEP signals that SEPs recognize the stakes.

For real estate executives and housing finance leaders, the outcome of the classification fight may prove consequential. If shared equity contracts are treated as mortgages in more states, underwriting standards, return structures and secondary market economics could shift.

If lawmakers instead carve out a distinct regulatory category, the model may retain more flexibility — but face ongoing state-by-state negotiation.

Cornell University administrator Warren Petrofsky will serve as the Faculty of Arts and Sciences’ new dean of administration and finance, charged with spearheading efforts to shore up the school’s finances as it faces a hefty budget deficit.

Petrofsky’s appointment, announced in a Friday email from FAS Dean Hopi E. Hoekstra to FAS affiliates, will begin April 20 — nearly a year after former FAS dean of administration and finance Scott A. Jordan stepped down. Petrofsky will replace interim dean Mary Ann Bradley, who helped shape the early stages of FAS cost-cutting initiatives.

Petrofsky currently serves as associate dean of administration at Cornell University’s College of Arts and Sciences.

As dean, he oversaw a budget cut of nearly $11 million to the institution’s College of Arts and Sciences after the federal government slashed at least $250 million in stop-work orders and frozen grants, according to the Cornell Daily Sun.

He also serves on a work group established in November 2025 to streamline the school’s administrative systems.

Earlier, at the University of Pennsylvania, Petrofsky managed capital initiatives and organizational redesigns in a number of administrative roles.

Petrofsky is poised to lead similar efforts at the FAS, which relaunched its Resources Committee in spring 2025 and created a committee to consolidate staff positions amid massive federal funding cuts.

As part of its planning process, the committee has quietly brought on external help. Over several months, consultants from McKinsey & Company have been interviewing dozens of administrators and staff across the FAS.

Petrofsky will also likely have a hand in other cost-cutting measures across the FAS, which is facing a $365 million budget deficit. The school has already announced it will keep spending flat for the 2026 fiscal year, and it has dramatically reduced Ph.D. admissions.

In her email, Hoekstra praised Petrofsky’s performance across his career.

“Warren has emphasized transparency, clarity in communication, and investment in staff development,” she wrote. “He approaches change with steadiness and purpose, and with deep respect for the mission that unites our faculty, researchers, staff, and students. I am confident that he will be a strong partner to me and to our community.”

—Staff writer Amann S. Mahajan can be reached at [email protected] and on Signal at amannsm.38. Follow her on X @amannmahajan.

Inland California’s relative affordability cannot always relieve financial stress.

My spreadsheet reviewed a WalletHub ranking of financial distress for the residents of 100 U.S. cities, including 17 in California. The analysis compared local credit scores, late bill payments, bankruptcy filings and online searches for debt or loans to quantify where individuals had the largest money challenges.

When California cities were divided into three geographic regions – Southern California, the Bay Area, and anything inland – the most challenges were often found far from the coast.

The average national ranking of the six inland cities was 39th worst for distress, the most troubled grade among the state’s slices.

Bakersfield received the inland region’s worst score, ranking No. 24 highest nationally for financial distress. That was followed by Sacramento (30th), San Bernardino (39th), Stockton (43rd), Fresno (45th), and Riverside (52nd).

Southern California’s seven cities overall fared better, with an average national ranking of 56th largest financial problems.

However, Los Angeles had the state’s ugliest grade, ranking fifth-worst nationally for monetary distress. Then came San Diego at 22nd-worst, then Long Beach (48th), Irvine (70th), Anaheim (71st), Santa Ana (85th), and Chula Vista (89th).

Monetary challenges were limited in the Bay Area. Its four cities average rank was 69th worst nationally.

San Jose had the region’s most distressed finances, with a No. 50 worst ranking. That was followed by Oakland (69th), San Francisco (72nd), and Fremont (83rd).

The results remind us that inland California’s affordability – it’s home to the state’s cheapest housing, for example – doesn’t fully compensate for wages that typically decline the farther one works from the Pacific Ocean.

A peek inside the scorecard’s grades shows where trouble exists within California.

Credit scores were the lowest inland, with little difference elsewhere. Late payments were also more common inland. Tardy bills were most difficult to find in Northern California.

Bankruptcy problems also were bubbling inland, but grew the slowest in Southern California. And worrisome online searches were more frequent inland, while varying only slightly closer to the Pacific.

Note: Across the state’s 17 cities in the study, the No. 53 average rank is a middle-of-the-pack grade on the 100-city national scale for monetary woes.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com