Hometap closes $300M securitization of home equity investments

Boston-based Hometap has closed a $300 million securitization of home equity investment (HEI) loans originated by the company, marking its fifth transaction in the space. 

The deal, closed on Aug. 29, included a $231 million Class A tranche rated at BBB(sf) and a $12 million Class B tranche rated at BBB(low)(sf) by Morningstar DBRS. 

“Through each securitization, we’re able to transform investor enthusiasm for Hometap HEI asset-backed securities into offerings that provide homeowners with stability and the confidence to reach their financial goals,” said Jeffrey Glass, CEO of Hometap. 

Hometap has now deployed more than $2 billion in home equity investments and served more than 20,000 homeowners.

In a recent interview with HousingWire, Hometap chief financial officer Tom Egan said that the company has only “scratched the surface” of unlocking the full potential of home equity.

HEIs are contracts in which a homeowner receives cash now in exchange for a share of the home’s future value. The money is typically repaid when the homeowner sells or refinances. There are no monthly payments over the life of the investment, which typically lasts 10 years.

Cara Newman, vice president and head of structured finance at Hometap, said the company’s multiple securitizations are “paving the way for broader investor participation in future HTAP transactions.”

Industry experts believe that demand for the product is strong, but investor appetite remains limited as HEIs are still a relatively new option for private equity real estate investors.