I had $2,000 for the water heater. Plenty don't.

My water heater died.

February. No warning. Two thousand dollars, gone in an afternoon. I had it sitting in an account. Plenty of people don't.

And when you don't, you look at the house. It is the biggest thing most families own. The equity sits there doing nothing while the roof leaks and the property tax bill goes up again.

A bank will lend against it. But the bank wants a credit score, an income statement, and a monthly payment you can prove you will make. If you are retired, or self-employed, or carrying a 540 score, that door is shut.

So a different kind of company knocks.

They call it a home equity investment. You get cash today. No monthly payment. No interest rate. No income check. In exchange they take a share of what your house is worth later.

It sounds like a partnership. The contract is something else.

The Consumer Financial Protection Bureau read these agreements and published what it found. Under many of them the amount you owe grows at 19.5% to 22% a year in the early years. Under nearly every home price scenario.

That is a credit card rate, secured by your house.

The company gets paid whether the house rises or falls.

The arithmetic is short. You take $50,000 against a $500,000 home. The company gets a 20% claim on the home's value at settlement. They have doubled their money on day one, before the house moves an inch. Your home would have to lose half its value before they lost a dollar.

Some contracts also mark your starting value down by 25% on paper. So the company only loses if your home falls more than a quarter.

Now run the Bureau's crash case. Your home drops 30%, then crawls back at 3% a year. You took $50,000. Three years later you owe $76,491.

Your house lost a third of its value. You still owe 53% more than you got.

The median customer signing one of these is in their fifties. Nine out of ten already carry a mortgage sitting in front of the contract.

So who is buying the bonds?

The companies writing these home equity contracts do not hold them. They bundle them into bonds and sell them.

Point closed the biggest one ever on July 15. Point Securitization Trust 2026-2, $508.6 million, rated by Morningstar DBRS. The senior class carries an A (low) rating. More than thirty institutions took part, eight of them new to the platform.

The pricing is the part I keep rereading. Point's riskiest rated notes came 220 basis points cheaper than the same company paid in February. Five months.

Splitero closed $296 million on May 27 and said its senior bonds priced at the tightest spreads a public rated deal in this sector has seen. Unison closed $235 million in August, more than double its March deal of $94.2 million. Barclays led it.

So the money got cheaper while the collateral got slower. That combination does not usually last.

And here is where it spreads.

There are no monthly payments in this product. That is the selling point. It is also the whole problem for whoever owns the bond. Cash arrives only when the house changes hands, or the owner takes a new loan, or the term runs out.

Existing home sales ran at 4.06 million a year in July, down 1.7% from June, according to the National Association of Realtors. Its chief economist put a normal pace at about 5 million.

Refinancing is no easier. Freddie Mac had the 30-year fixed at 6.69% on August 6. Millions of owners are sitting on 3% loans they will not give up. One estimate puts the number of sales that lock-in prevented this year at about 870,000.

The exit is the product. And the exit is shut.

The homeowner cannot pay in instalments either. These agreements generally do not allow partial repayment. You settle the whole amount or you do nothing.

Between 89% and 95% of these customers already carry a first mortgage. If the bank says no to a refinance, the house goes on the market.

Meanwhile, the lawyers arrived.

Governor Janet Mills signed LD 1901 on April 13. Maine now calls these agreements shared appreciation mortgage loans and treats them as consumer credit under state law. The rule reaches back to October 29, 2025. Agreements written after that date without complying are void and unenforceable.

One clause should worry every bond buyer. Anyone who purchases or is assigned one of these contracts takes on all the claims and defences the homeowner could raise against the company that wrote it. Buying the paper means buying the argument.

A federal appeals court ruled in October that Unison's product met Washington state's definition of a reverse mortgage. Unison agreed to settle that case.

Massachusetts Attorney General Andrea Joy Campbell is suing Hometap on the same theory. The parties have until October 23 to submit evidence. Hometap calls the suit meritless.

North Carolina filed its own bill on April 30. Pennsylvania is moving too. Redwood Trust entered this business in early 2025 and walked out within months.

Everyone else kept issuing.

Three more things worth keeping track of this week.

Belgium is paying more to borrow than at any time since the euro crisis. Its ten-year yield reached about 3.82% on August 18, the highest since 2012. France went above 4.1%, a level last seen in 2009, and Germany touched roughly 3.25%. Belgian federal interest costs were €10.78 billion in 2025. The country's own monitoring committee expects them to climb by €11 billion by 2031. That is a small open economy repricing its debt in public.

A brick company in Ohio is telling you something about the grid. Belden Brick has made brick in Sugarcreek for 141 years. Its monthly electricity capacity charge went from about $1,600 to $12,000. Plaskolite, a plastics maker, saw the same charge go from $200,000 a year to $1.2 million. The capacity price across the PJM grid rose from $28.92 per megawatt-day to $329.17. Data centres are bidding for power against factories, and the factories are losing.

Trend-following funds only just got back into stocks. Bank of America's read is that systematic equity positioning returned to its pre-conflict level around August 21, after months of sitting underweight. The same work suggests a 3% fall in the S&P 500 would be enough to set off more than $100 billion of mechanical selling. Thin cushions under a market at highs. We'll see.

In 1997 a British bank manager was still somebody you trusted.

Bank of Scotland sold about 12,000 shared appreciation mortgages between November 1996 and March 1998. Barclays sold 3,253 more in three months of 1998. Barclays lent £98 million in total, so the average loan was around £30,000. They were aimed at older homeowners who had paid off the house.

The offer was short. Borrow up to a quarter of your home's value. Pay no interest, ever. Nothing due until you sell or die.

One clause did the work. When the house sold, the bank took back the money it lent plus 75% of the rise in the home's value since the day you signed.

British house prices then went up for twenty-five years.

One homeowner borrowed £22,000 in 1998 against a house worth £88,000. The house later sold for £450,000. The estate paid Barclays more than £290,000.

The loan was £22,000. The bill was £290,000. Nobody committed fraud.

Others came out worse. Lawyers have described a £25,000 loan from 1998 that stood at £333,000 twenty-six years later.

The borrowers could not move. Selling meant handing over three quarters of the gain, which left nothing to buy the next house with. In 2014, sixteen years on, nearly half of these mortgages were still outstanding. For many the only way out was death.

It took decades to assemble a case. On the evening before a six-week trial in January 2024, 160 current and former customers settled with Bank of Scotland. No admission of liability. No change to the mortgages or their terms.

So the contracts stand. Twenty-eight years after somebody signed them at a kitchen table.

The banks never had to lie about any of it. They simply understood the shape of the next twenty-five years better than the customer did.

We'll see.