Homeowner PSA: the truth about shared equity providers

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This is the real risk behind shared equity deals

This week, I spoke with Matt the Mortgage Guy, who issued one of the most urgent warnings I’ve heard all year—one that every homeowner and investor needs to take seriously.

Shared equity providers are marketing themselves as a smarter, low-risk way to tap into your home equity. But according to Matt, who’s article was recently featured in Mortgage Professionals of America, these products border on predatory and can trap homeowners in financial arrangements they barely understand—until it’s too late.

Here’s the truth:

1. It’s a second lien with strings attached

At a time when homeowners across the U.S. are sitting on huge equity gains—but facing high interest rates—some are turning to second-lien products. One of the flashiest? Shared equity loans.

But Matt says there’s an issue with this:  you’re essentially selling a piece of your future upside—and most borrowers don’t understand that.

A homeowner might borrow $100,000 today, but down the road, owe $300,000 or more to the equity provider when they go to sell or refinance.

2. The fine print no one reads

These agreements often span 100 pages or more, and Matt says he has spoken to too many borrowers in California who were left in tears—unable to refinance, stuck in loans they never fully understood.

He’s seen deals where the equity partner fronts just 10% of the down payment—but locks in 36% of the future upside. If that home appreciates from $1 million to $2 million? The borrower writes a check for $470,000 just to exit the arrangement.

3. Once you’re in, you may not get out

Matt also shared that many wholesale lenders won’t even touch refinances when a shared equity product is attached. That means some borrowers are stuck with a first mortgage they can’t refinance—even when rates were low.

He says that there were cases where he had to stop helping people because he couldn’t get their files done. Nobody would touch them.

This is where the trap tightens, You’ve already given up a big chunk of equity, you can’t refinance, and if you try to sell, you’re writing a six-figure check just to close.

4. ChatGPT isn’t a mortgage broker

Matt offered a clear warning to consumers relying on AI chatbots for financial advice:

If you type in a question, and ChatGPT pulls the company’s marketing language—it’s scraping from the people trying to sell you the worst product.

This is especially dangerous with emerging financial products, where independent, critical analysis is still scarce online.

Bottom line?

You need to talk to a real human, preferably someone who’s brokered thousands of loans and seen what happens after the paperwork is signed.

5. Desperate times don’t justify desperate products

In today’s economy, with credit card debt at record highs and affordability under pressure, homeowners are vulnerable. But that doesn’t make shared equity the solution. It makes it more dangerous. In Matt’s words: 

“The industry needs to stop throwing lifelines that have weights attached.”

There are better ways to unlock equity—HELOCs, traditional seconds, or cash-out refis with transparent terms. They might not have slick ads, but they also don’t come with surprise six-figure bills down the road.

Big Picture

Shared equity might sound like a solution. But for too many homeowners, it’s a financial landmine waiting to go off. If you’re thinking about tapping into your home equity, get real advice from a licensed broker, not a chatbot.

And if someone promises you “no payments” or “a smarter way to borrow,” ask what happens when you sell.
Ask who really owns your upside.
Ask what it would cost to unwind.

Because when you partner with the wrong lender, it’s not just your equity you’re risking—it’s your financial freedom.

ResiClub chart of the week

This week, ResiClub’s Lance Lambert highlighted Zillow’s latest home price forecast, which now calls for a 2.0% drop in U.S. home prices during calendar year 2025, and a 1.0% decline between June 2025 and June 2026.

That’s a sharp revision from the start of the year, when Zillow expected home prices to rise 2.6%. But faster-than-expected inventory growth and ongoing affordability challenges led Zillow to trim its outlook multiple times.

According to Zillow economists, “plenty of options have given [buyers] more bargaining power than in any summer in at least seven years.”

Here are some other key takeaways from Zillow’s updated forecast:

Zillow expects home prices to rise in Atlantic City, NJ (+2.9%), Kingston, NY (+2.2%), and Knoxville, TN (+2.0%).

The steepest declines are expected in Houma, LA (-9.6%), Lake Charles, LA (-9.5%), and San Francisco, CA (-6.1%).

Slight mortgage rate relief could help late in 2025, but “significant improvements appear unlikely,” according to Zillow economists.

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