• What's at Stake: Traditional lenders who fail to offer flexible equity options to cash-strapped homeowners risk losing years of future interest revenue.
• Supporting Data: More than 40% of homes with a loan in the United States were equity-rich in the second quarter, according to Attom.

Lenders who don't provide flexible home equity products are increasingly at risk of losing business to alternative mortgage companies.

Balance Homes announced Thursday its co-ownership program, which settles an existing mortgage, expanded into six news states. Lenders who do not adequately help homeowners tap equity may lose years of future interest revenue and servicing fees as a result.

The company now serves homeowners in Alabama, Florida, Georgia, Indiana, Kentucky, Minnesota, Missouri, North Carolina, Ohio, South Carolina, Tennessee and Texas.

"The premise of this company has always been to identify where Balance's product can be most helpful," CEO Aamer Abdullah said in a press release. "First providing relief through co-ownership, and immediately setting a path back to full ownership, in partnership with the very people who bought that home, and want to raise their family in that home."

Through the program, Balance purchases a share of the home and pays off the mortgage in the process, which lowers the co-owner's total monthly obligations and frees up cash. The program was designed for homeowners who experienced an unforeseen or costly financial change, according to the release.

The agreement starts with a home value estimate, and then the company pays the homeowner a lump sum for the equity it invests in. This makes Balance a partial owner of the home, but it doesn't have any occupancy rights.

Rather than paying interest, the homeowner gives Balance a percentage of the future equity appreciation in the property. Depending on the agreement, homeowners may not be required to make any monthly payments, according to the company's website.

At the end of the term or when the homeowner decides to sell, the company is paid back at the current market value. Equity can be repurchased incrementally at any time, and homeowners who buy back Balance's share within three years earn a sliding-scale fee rebate, the release said.

The company also provides support throughout the process. Before signing, every participant completes a session with a U.S. Department of Housing and Urban Development-certified housing counselor at no cost and reviews a full walkthrough of the agreement. After closing, homeowners receive ongoing credit counseling, according to the release.

Balance relaunched in 2025 to revive its co-ownership product following a $30 million investment led by Falco Group. The company noticed an opportunity in the home equity market, as 41.1% of homes with a loan in the United States were equity-rich in the second quarter, according to Attom. Meanwhile, only 30% of Americans would pay a $1,000 emergency expense from savings, Bankrate found.