Digital mortgage lender and nonbank home loan provider Better.com has launched “Equity Unlocker,” a mortgage innovation that allows employees to pledge vested stock equity as collateral for a down payment without selling their stock.

“At Better, our mission is to make homeownership cheaper, faster and easier for all Americans,” Better CEO and founder Vishal Garg said. “Today, we are very excited to announce that we have created Equity Unlocker to help Amazon employees unlock their equity, their homes and their futures.”

Current and former Amazon employees who have vested equity in the company will be the first group to have access to this home financing product, according to a prepared statement. Equity Unlocker is currently available in Florida, New York and Washington state.

Garg said the process of homeownership is “opaque and stressful,” and it is difficult for people with student debt and almost no savings to become a homeowner. Many companies provide their employees with equity over cash, adding to this issue.

“The status quo is broken,” Garg said. “Even though equity is a valuable asset, it is considered ineligible by most banks and financial institutions when calculating the necessary down payment on a home.”

Nick Taylor, head of real estate at Better, said that the companies have been in talks about the product since mid-2022.

Taylor said the goal of the product is to allow employees to unlock their stock equity to fund a down payment on a home.

“What we then do is we look at that pledge and we value the equity at 50% of the current share price. We look at the date that an offer is made on the home and we calculate what the share price is for Amazon that day,” he said. 

The product is also “non-mark-to-market and non-recourse,” so the terms of the loan will not change with the stock market, according to a statement from the company. An Amazon stock will be valued during a home appraisal, and the rate and term can be locked within the Better platform.

“They [Amazon employees] don’t have to sell the stock, and that’s the big benefit,” Taylor said. “It allows that employee to not have to pay an excise tax or capital gains tax, and can still benefit from the stock value growing over time.”

If in the future, an employee decides to sell stock or use a different asset to pay off their down payment, they can — and Better will release the pledge of stock, Taylor said.

Better said it created Equity Unlocker after noticing many Amazon employees were already using Better.com to fund home purchases, with the company funding more than $1 billion for home financing needs for Amazon employees. Equity compensation was a particular concern for these employees, according the statement.

“Up until last year, we funded over $100 billion in loans, and what we noticed was 1% was actually coming from Amazon employees,” Taylor said. “There was a heavy interest to find a way to leverage that equity value that they have accumulated through their tenure at Amazon to purchase a home.”

Taylor said this product, in the “immediate term,” will allow the employees to save 25% to 35% by not having to pay a capital gains tax on the sale of a stock, which can total “hundreds of thousands of dollars” saved.

Better’s loan origination system Tinman is powered by AWS.

This January, Better launched a program called “One Day Mortgage,” with a goal of allowing customers to “apply for a mortgage, get pre-approved, lock their rate and receive a mortgage commitment letter” within a day.

The company came under fire in December 2021 when Garg fired 900 employees on a Zoom call. Three more rounds of layoffs followed.