EasyKnock adds to equity alternatives with HomePace buy

EasyKnock, which is a home equity finance alternative provider, has made its fourth acquisition since the start of 2023 with the deal to acquire HomePace. Terms of this transaction were not disclosed.

"HomePace products address a critical and sizable market need, and will be a powerful tool in our arsenal," said Jarred Kessler, CEO and founder of EasyKnock," in a press release. "The joining of our forces pulls the ladder up behind us and cements our role as a formidable, solution-driven presence in American real estate."

HomePace offers home equity investment products in which the company acquires an interest in the house and shares in the appreciation gains when the property is sold. These arrangements have also been sometimes referred to as shared appreciation.

"This magnifies our ability to realize our mission: giving people greater financial flexibility," Joe Cianciolo, CEO of HomePace, said. "EasyKnock's reach, unequaled platform, and technical acumen in modern real estate transactions ensures we will be able to reach and help countless Americans."

Home equity levels are at record highs, at nearly $17 trillion, of which $11 trillion is considered to be tappable, a recent ICE Mortgage Technology report stated.

However, the ease of accessing that equity has been questioned by the providers of alternatives such as EasyKnock, which in the press release cited a report that said one in nine homeowners had issues in tapping their house's value. The Freddie Mac pilot for the government-sponsored enterprise to purchase closed-end seconds was designed to allow for a second market exit for lenders to offer an alternative to cash-out refinancings.

Morningstar DBRS published a primer on the home equity investment contract business, noting five unrated and four rated securitizations (from Unison, Point and Unlock) of these loans have taken place in recent years.

"Interest in this market is high and can be expected to continue growing, especially if interest rates remain high, and homeowner equity stays strong," Derek Moran, a Morningstar DBRS senior vice president said in a statement. "Morningstar DBRS anticipates continued interest in the features of the HEI product as it is a diversified source of funds for homeowners, as well as an attractive source of returns and diversification for investors."

Each EasyKnock acquisition has a different niche in that marketplace.

Ribbon, a provider of financing for cash offers, was purchased in May 2023. Back in November 2022, it had significant layoffs and temporarily suspended the RibbonCash program as it revamped its offerings.

"We are thrilled to come together with EasyKnock and their pioneering sale-leaseback offering to provide solutions to more and more people," Shaival Shah, Ribbon CEO and co-founder, said in the May press release.

Next was EasyKnock's deal last September to buy Onder, a property maintenance company. At the time, EasyKnock said the acquisition would simplify the home repair and upgrade process for its marketplace customers.

Balance Home, whose purchase was announced in December, offers a "home equity co-ownership" product.

"Acquiring Balance Homes complements EasyKnock's existing sale-leaseback offering by providing homeowners additional options to convert the equity that is rightfully theirs into cash for their current needs," Kessler said in a press release at that time. "This acquisition is the next step on EasyKnock's clear path to lead the industry as the first platform to offer customers alternative solutions to buy and sell, finance new homes and utilize their equity in one place."