Hometap continues to fight ‘illegal reverse mortgage’ lawsuit in Massachusetts

A lawsuit filed earlier this year by the state of Massachusetts against home equity investment (HEI) provider Hometap is being allowed to proceed after a ruling in August by a Suffolk County Superior Court judge. And the parties made new filings in court last week as they attempt to convince the court of the merits of their arguments.

State Attorney General Andrea Joy Campbell sued Hometap in February 2025, labeling the company’s primary product offerings as “illegal reverse mortgages that fail to comply with state consumer protection laws.”

Hometap, which operates in 16 states and Washington, D.C., countered these claims by saying it “firmly believes in the integrity of our products and the financial flexibility they provide to Massachusetts homeowners.” But as the lawsuit continues to play out, Massachusetts is no longer listed among the states the company does business in.

The suit in Massachusetts is similar in nature to a case filed in Washington state against fellow HEI provider Unison. An appellate court recently ruled in favor of the plaintiffs and determined that Unison’s product was a reverse mortgage under state law. Unison initially sought to appeal that decision but settled with the plaintiffs shortly thereafter.

New filings in Hometap suit

On Nov. 3, Hometap and the state Attorney General’s Office (AGO) released multiple court filings in which the plaintiffs sought to “strike insufficient defenses” from the lawsuit, while the defendants attempted to keep them in place.

Among the legal arguments addressed in the filings, Hometap labels the lawsuit as an “about-face.” The company claims that neither the AGO’s office nor the Massachusetts Division of Banks (DOB) expressed concerns about the company’s HEI product going back to 2018, when they were first introduced in the state. The company also said that the state bank regulator has acknowledged that HEI products differ in many aspects from mortgage loans.

Additionally, Hometap notes that companion bills were introduced by Massachusetts lawmakers in early 2025 that seek to place HEI providers under the DOB’s purview. H. 1106 and S. 705 would specify that HEIs are not loans and set forth obligations to ensure they are not deceptive or unfair.

The company said it’s already abiding by these obligations and that the HEI industry helped to develop the bills as part of its desire to be more closely regulated.

“Just about a month after this legislative process was initiated, the Commonwealth chose to short-circuit (and contravene) it by filing this action in a complete course reversal of its early interactions with Hometap,” the company’s filing states.

In response, the state argues that its early interactions with Hometap do not equate to an endorsement of its product.

It notes that the AGO’s office is allowed to take meetings with the public “without needing to predetermine whether it is in a position to commit the resources necessary to reach a firm legal position about a purportedly novel product or immediately prioritize an investigation and enforcement action.”

It goes on to claim that forcing the AGO to do so would make it less accessible to the public, since it would be placed in a position to make “snap-judgments of law based on limited information.” The AGO argues that requiring further discovery into whether its enforcement actions are reasonable would be overly burdensome and should be stricken from the lawsuit.