Employees Can Now Get Home Loans With Amazon Stock Options As Collateral

Amazon is allowing its employees to use company equity as security when purchasing a home through the online mortgage lender Better.com.

Equity Unlocker is a program meant to make homeownership “cheaper, faster, and easier” for employees whose assets are tied to corporate stock.

In a press release, Vishal Garg, CEO and creator of Better, stated, “We understand how difficult it is for young professionals saddled with academic debt and a lack of resources to buy a property.” This issue is worsened by the fact that many of the greatest and fastest-growing companies increasingly compensate their staff with shares instead of cash.

Vishal Garg, CEO and creator of Better (Image source: The Daily Beast)

According to a recent Schwab poll, 43% of millennials have exercised or sold their stock compensation, accounting for an average of 32% of employees’ net worth.

Equity Unlocker enables employees to pledge their equity as collateral instead of selling their stock holdings for a down payment, enabling them to become homeowners while continuing to profit from their company’s growth. Numerous banks and mortgage lenders prohibit this technique, except for high-net-worth individuals.

“Even though equity is a significant asset, most banks and financial institutions disregard it when computing the required down payment for a home,” said Garg.

Amazon promoted the program as a means to support non-working and unemployed employees.

Amazon spokesperson Brad Glasser stated, “We’re continuously exploring ways to improve our benefits and better support our employees’ mental, physical, and financial wellness.” As part of this, we offer a variety of financial perks, such as programs to assist employees in feeling financially secure and tools for saving money and gaining financial awareness.

The program is immediately accessible in the states of Florida, New York, and Washington. During the second quarter of 2023, additional states will acquire access.

Yet, there are hazards associated with utilizing equity as collateral. As stock prices decline, for instance, the collateral loses value. This is typically not a concern for minor changes, but if the stock value falls below a specific threshold, brokers will frequently issue a maintenance call requiring the borrower to contribute additional cash or securities as collateral.

Amazon’s stock price has decreased by over 40 percent over the past year.