By mid-2024, 49% of mortgaged homes in the U.S. were “equity-rich,” according to the real estate research firm. ATOMmeaning they were value greater than what their owners owed on their mortgages. Historically, homeowners in this case had only two options for converting that value into money if they didn’t want to sell their homes: they may get a home equity loan or a home equity line of credit. But each of those options require monthly payments. This affects the immediate value of cash. As many homeowners unlock their equity because they need quick access to as much money as possible, often during stressful times – perhaps to repay an unexpected medical bill – traditional options frequently fail to solve the problems people actually face.
Serial entrepreneur Jeffrey Glass set out to rectify this discrepancy with his latest company, Touching the home screenlaunched in 2017. With Hometap, homeowners can use their equity to repay debt, start a business, or otherwise solve problems without having to sell their homes. The company’s “Home Equity Investments” offer offers homeowners a one-time payment in exchange for a portion of the home’s future value, or simply pay it off over 10 years, eliminating the need to make monthly payments.
This yr was a breakout yr for Hometap, which achieved a $1 billion equity investment in January and then closed its inaugural securitization on $217 million in June. All this made Glass a finalist in our list of 20 revolutionary leaders Entrepreneur 2024.
In January, the company surpassed $1 billion in equity investments. What was it like to reach this necessary milestone?
It was quite surreal. Honestly, we started working on this concept for Hometap in late 2016, and back then, if you said, “One day, the company you’re working on will be responsible for spending over a billion dollars and helping over 10,000 homeowners,” I probably would have believed you, but I can be skeptical.
Did people in the industry doubt the idea of Hometap at first?
When we started working on this concept, we were wondering how to create a recent company. But the goal wasn’t just to create a company that might do well from a business standpoint. In fact, she had a much loftier mission, which was to do something that might really change people’s lives. If you go back to 2016 and say, “Hey, let’s come up with an alternative to traditional lending and instead of lending people capital, we’ll do it, invest with them.”
If you talked to anyone in the real estate industry back then, which we spent a lot of time trying to learn, the answer you commonly received was, “That’s the stupidest idea ever.” AND [the criticisms] were twofold. One of them was: “It might be too hard. Homeowners are used to taking out loans. That’s what their parents did, that is what their grandparents did.” And the second part is that capital won’t do it. Capital likes to borrow money, likes rates of interest, and needs regular, ongoing payments. Or if you own the property and rent it out, you receive regular rental payments. But either way, if you are an investor, you get regular money flow that pays off. However, in the case of the Hometap investment, the idea is that we give the homeowner capital today, and over the next 10 years of his current product, the homeowner will have the opportunity to determine when he wants to settle with us and how he wants to settle with us.
When [people told us it was impossible] I knew immediately that I had either come across something really smart or something really, really silly. Knock on wood, but I think we have come up with something really smart.
As a customer, making decisions about home ownership and lending requires a lot of trust. How do you be certain that homeowners trust Hometap?
You cannot achieve success in selling a financial product if someone doesn’t trust you. You have to have the opportunity to explain it in a way that they will understand it. You really have to try to keep things easy, with as few exceptions and regulations and small print as possible.
When we were initially working on different versions of the product, a very critical part for us was determining how to build something that was easy for the homeowner to understand. Then, after all, make sure you build in loads of tools to ensure clarity and understanding. A variety of it comes down to the way you train your team to be certain that your team is spending time helping people understand how it really works and why it really works.
You started other corporations – a mail-order catalog company in college, and later a direct marketing company, Zooba. You helped launch the nonprofit BUILD in Boston. You worked in private equity. Before launching Hometap, did you would like to create something that may have a personal impact on your customers?
I used to be. I used to be very lucky. I had some success in entrepreneurship and really felt that at this point in my profession it was more necessary to build something that may have a positive impact on society and really make a difference, fairly than simply being a successful business. In this case, you’ll be able to’t really do the first without doing the second. Business must work. It has to make sense for homeowners. There has to be a value proposition or they will not want the product. It must provide an appropriate risk-adjusted return on capital, otherwise they’ll not be willing to invest in capital to have the opportunity to help homeowners. All of this has to work from a business perspective. But greater than that, what makes all this difficult work worthwhile to me is the mission we try to accomplish: make home ownership less stressful and more accessible.
You mentioned that it’s really necessary to make sure your employees are on board with the mission. As a leader, how do you ensure this?
Once a month, several teams in our group talk about two or three different homeowner stories and situations. A variety of our team doesn’t need this reminder because if you are on the sales or operations team, you talk to homeowners and do that each one day long. But I think a part of it is sharing stories and how we measure the business. One of our key performance indicators is homeowner reviews on Trustpilot. We are geeky and religious about getting really good reviews and testimonials on Trustpilot and feedback from homeowners. If you look at our business statistics, we have one of the best consumer finance brands on the web, with just 1000’s of five-star reviews on Trustpilot. We also have amazing Net Promoter results from homeowners – not only homeowners who took our equity, but also homeowners who took our equity and then, years later, settled with us. So we got paid – all settlements were accomplished – and they still rave about how necessary we were to them and how we helped them through a difficult situation.