Mariana Amorim, Department of Sociology, Washington State University — Home Equity Sharing Agreements in Washington State
- Issuer
- Congressional materials
- Date
- 2025-12-04
Summary
A slide presentation dated December 4, 2025, titled Home Equity Sharing Agreements in Washington State, by a research team from the Department of Sociology at Washington State University. The slides define home equity sharing agreements (HESAs) as products giving homeowners an upfront lump-sum payment in exchange for a percentage of the home's future value or appreciation, settled by a balloon payment. They describe contract terms, the growth in originations, shared-value and shared-appreciation contract types, and a worked settlement example. The presentation discusses cost caps, reporting that about one-quarter of HESAs in Washington do not include them, and summarizes interviews with 14 HESA consumers. It closes with conclusions that HESA costs are hard to predict and that more data is needed.
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Cite this document
“Mariana Amorim, Department of Sociology, Washington State University — Home Equity Sharing Agreements in Washington State.”
Original at app.leg.wa.gov, dated 2025-12-04. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2025-12-04-2025-12-04-a33537-d289967-wsu-department-of-sociology-home-equity-sharing-agreements-i/
, SHA-256 456d236eb92d42f52f272816ff3331dde8cdfbad4fa0798db03817275bac9da6.Full text
HOME EQUITY SHARING AGREEMENTS IN
WASHINGTON STATE
MARIANA AMORIM
DEPARTMENT OF SOCIOLOGY
WASHINGTON STATE UNIVERSITY
RESEARCH TEAM:
MARIANA AMORIM, CRYSTAL HALL, GREGG COLBURN, SHARON KIOKO, BENJAMIN BRUNJES, JULIA KARON, XINYUE WU, AND KAYLA
LENDY
WHAT ARE HOME EQUITY SHARING AGREEMENTS?
Also known as Home Equity Investments or Home Equity Agreements
Financial products that provide homeowners with an upfront lump-sum payment in exchange for a
percentage of the future value or appreciation of their home.
Do not require any monthly payments, but instead, a balloon payment at:
The end of the term (10 to 30 years).
Upon the occurrence of a triggering event (e.g., death, sale of the house).
At the buyout – based on homeowner’s choice.
HESA CONTRACTUAL TERMS
Some similarities between providers and HESAs vs. other mortgage products:
Homeowners are responsible for origination fees and other third-party costs
Investment secured through a Deed of Trust on the property
HESAs impose certain limitations on the homeowners’ ability to refinance their existing mortgage or take out new loans.
HESA providers have occupancy requirements, maintenance requirements, insurance clauses.
Some unique characteristics of HESAs
Less strict eligibility requirements (based on income, age, and credit score)
No monthly payments (instead, a balloon payment)
Not reported to credit bureaus
HOW COMMON ARE HESAS?
3000
Available to a greater share of homeowners
Cumulative number of agreements
compared to other traditional mortgage products.
Still small but growing marketplace.
35-fold increase in the number of originations over 7
1000 2000
years.
In Washington, about 1 in 5 HESA contracts have
been settled.
About 50% were terminated through the sale of the
home, most others through buyouts. 0
2007 2011 2015 2019 2023
Year
Originations Terminations
TYPES OF HESA CONTRACTS
Shared-Value Products Shared-Appreciation Products
Settlement payment is calculated as a set percentage of Settlement payment is calculated as a set percentage of
the property’s future value the property’s future appreciation
SETTLEMENT PAYMENT ACROSS HESA TYPES
Hard to predict and fairly variable across HESA companies.
Generally, greater home appreciation scenarios are associated with greater HESA settlement amounts.
Settlement amounts generally grow faster in earlier contract years compared to later contract years.
Contracts **often** include terms that protect providers against losses due to short-term fluctuations in
home prices
CALCULATING HESA SETTLEMENT PAYMENT FOR ONE TYPE OF
CONTRACT
Shared Value HESAs
Appraised home value 650,000
Upfront payment (U.P.) 100,000
UP as % of home value 15%
Multiplier (M) 2.0
Provider share of future value 30%
(% U.P. x M)
Final value (2 years) 716,600
Settlement payment $214,990 This would not happen if
Annualized Cost Growth Rate 46.6% the contract included a
cost cap.
Final value (10 years) 1,058,800
Settlement payment $317,635
Annualized Cost Growth Rate 12.4%
COST CAPS
Cost caps are essential in limiting homeowners’ settlement amounts.
Today, all large companies in Washington implement cost caps (~19%, compounded annually), which are
voluntary.
About one-quarter of HESAs in Washington do not include cost caps (originated by one company, before 2023).
COST CAPS
Cost caps are essential in limiting homeowners’ settlement amounts.
Today, all large companies in Washington implement cost caps (~19%, compounded annually), which are
voluntary.
About one-quarter of HESAs in Washington do not include cost caps (originated by one company, before 2023).
Contracts with no cost caps also included less protection against losses for this company.
This means more variation in outcomes!
• Average Annualized ROI (or “cost growth rate” for consumer) in the same range (17%-19.5% )
• More instances of losses for company (small or negative ROI) and of exorbitant costs for consumers (ROI>
50%)
COST CAP X TIMING OF SETTLEMENT
200 350
200 250 300
Annualized ROI
National Home Price Index
0 100
150
-100
2010 2015 2020 2025
Year
Uncapped HESAs Capped HESAs
Home Price Index
HOW DO HESAS COMPARE WITH OTHER PRODUCTS?
HESAs can be objectively more expensive than existing mortgage products, particularly if:
The homeowner has a good credit score
The HESA is settled early
Settlement occurs under above-average appreciation rates
Yet, it is hard to make clear comparisons because:
Some homeowners may not qualify for alternative products
The “value” of not having to make monthly payments or of potential improvements to credit score are hard to gauge.
What we showed you, may not be reproduced in the future!
Some outcomes are linked to uncapped HESAs
Outcomes are highly dependent on historic moment of origination and settlement
QUALITATIVE EXPERIENCE OF HESA CONSUMERS (N=14)
Most homeowners experienced financial difficulties before entering HESAs.
Most had taken 8,000-18,000 new debt before entering HESAs.
Most HESA homeowners wanted to pay off debt.
Homeowners had varying levels of control over the use of their HESA upfront payment
Most homeowners chose HESAs because it gave them access to large lump-sums and required no monthly payments.
Homeowners didn’t fully understand how HESAs worked
Many homeowners agreed that the HESA providers did not provide enough information
Homeowners generally had difficulties calculating or estimating settlement amounts, despite companies’ efforts to make
these calculations more accessible.
VARIED LIVED EXPERIENCES
Homeowners with negative experiences.
Homeowners with positive experiences.
They were more likely to have had no other
They were more likely to have had alternative options alternative options to tap into their home equity
to tap into home equity,
They were experiencing financial hardships and time
They felt self-efficacious in pursuing information for pressure
themselves.
They reported feeling confused, powerless, pressured,
They were willing to share large portions of their deceived at the time of origination.
future home value gains to not have present debt
obligations. The HESAs were not enough to resolve their financial
difficulties.
Their home was not their only large asset
These homeowners felt they might someday be forced
Their future economic wellbeing was not seen as to sell their home or were concerned about their
tied to that particular property. ability to use their home to support themselves in the
future.
CONCLUSIONS
Expand access and create additional options, but also the potential for homeowner harm.
HESAs costs are hard to predict and to compare to other products.
HESAs may be riskier and costlier, but also valued by homeowners who cannot afford monthly payments
Homeowners’ lived experiences may vary meaningfully – even if “objective costs” did not.
There is a need for more data to understand homeowners’ outcomes.
Mariana Amorim
Department of Sociology | Washington State University
Mariana.Amorim@wsu.edu
THANK YOU Researchers: Crystal Hall, Gregg Colburn, Sharon Kioko,
Benjamin Brunjes, Julia Karon, Xinyue Wu, and Kayla Lendy.
Acknowledgements: We are thankful for the support and
information received from the WA Department of Financial
Institutions, WA homeowners, and from four large HESA companies
– Unison, Hometap, Unlock, and Point.
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