What

Hometap is a debt alternative for homeowners who are house rich and cash poor. Rather than take out a second mortgage, HELOC, or refinance, customers can receive an investment in exchange for a percentage of their house’s equity. Homeowners have to settle the investment at the end of a ten-year term, either through selling their house, buying out the investment, or refinancing their mortgage. Hometap raised $100M in a Series B round in 2019, with investment from ICONIQ Capital, General Catalyst, G20 Ventures, Pillar Ventures, and American Family Ventures. 

Why

According to Jeff Glass, Hometap’s CEO and Co-Founder, the US is at an all-time high of people who are house rich and cash poor. Typically, these are people who have lived in their home for a long time, having built up a lot of equity through paid off debts and home value appreciation, but lack cash savings for both positive and negative needs—from paying for kids’ college tuition to covering parents’ medical expenses. 

“Where our capital comes in handy is helping people solve these kinds of acute opportunities and challenges—and where for a variety of reasons they either don't want more debt or really can't support more monthly payments and monthly interest,” Glass said. 

Glass also noted that equity investments have long existed for businesses but not for consumers. He thinks Hometap can help expand access to equity investments, especially for equity-rich people. 

How

Since its product is a nascent investment form whose alternative—in the form of debt and loans—has a considerable advantage in its size, age, and recognition, Hometap sees an especial need to be transparent and compliant, often going above federal requirements to establish homeowner trust. 

Hometap translates the legalese of long legal agreements into simple, concise English. Its documents explain what happens if the value of the homeowner’s house increases or decreases, as well as the ways customers can buy out the investment at the end of the ten-year term. “You need to put the homeowner at the center of the wheel and make sure that you're a good actor in every possible way,” Glass said. To Glass, this includes dedicating additional resources for training employees, in order for them to clearly outline the terms of investments to customers. 

“It's our aspiration to build the best consumer brand around, and you build your brand one homeowner at a time,” Glass continued. “You just go the extra mile.” 

Operating in the consumer finance and housing space, Hometap also prioritizes non-discriminatory outcomes in its practices. It’s built systems processes monitoring to ensure that it doesn’t have discriminatory biases in its sales, underwriting, and product. 

And finally, data privacy presents another compliance and branding arena. Glass said personal identifiable information access is restricted. “I don't have access to the system that has various pieces of homeowner data and information,” he said. “Even though I'm the CEO, I don't need to have that information.” Hometap has also invested in security systems to compartmentalize data and prevent breaches. 

Hometap has seen interest in its product increase as interest rates have risen. Compliance—and, from there, customer satisfaction—will remain core tenets as Hometap scales.