A group of senators is demanding answers from the former CEO of Easyknock regarding the fintech’s unexpected shutdown and his relationship to the company now serving former clients.
In a letter addressed to founder and CEO Jarred Kessler, Sen. Elizabeth Warren, alongside six Congressional colleagues, asked for details behind the company’s business practices and the current status of client accounts. The home equity investment platform informed customers earlier this month it was closing its doors in a brief message that also appeared on its website.
One of several fintechs promoting products that allow homeowners to tap into or “share” in their properties’ equity accrual, New York-based Easyknock ran into nationwide legal trouble with its sale-leaseback agreements. Terms of the contracts led consumers to release their homes to the company, temporarily turning them into tenants, but given assurances they would receive the value back.
Many who opted into the Sell & Stay program, though, ended up “far worse off than they were before the company found them,” according to the letter. Easyknock imposed rent increases and additional fees on some, and customers rarely got anything close to their homes’ value at the end of the contract terms, the senators claimed. Some lost their investments altogether, leading to multiple lawsuits.
“We are deeply concerned about Easyknock’s lasting impact on vulnerable homeowners, including homeowners with pending residential sale-leaseback agreements with your company, and the extent to which the company will be handling these agreements in the wake of its abrupt closure earlier this month,” the lawmakers wrote.
While former clients are being instructed to send inquiries to NESE Property Management, the letter pointed out both businesses share some of the same contact details, including a New York-based phone number and a postal address in Cleveland.
“Please explain what relationship EasyKnock has with NESE Property Management. Do the companies have any executives or key officers in common?” the officials asked. NESE’s website includes no information regarding the firm’s history or leadership structure.
They also asked Kessler to address whether NESE had paid to purchase the fintech’s former contracts and the impact of the new business arrangement on pending legal suits.
Alongside Warren, the letter was signed by Sens. Richard Blumenthal, Chris Murphy, Tina Smith, Chris Van Hollen, Bernie Sanders and Peter Welch, several of whom hail from states where Easyknock has run into legal scrutiny. Warren, Van Hollen and Smith also serve on the Senate Banking Committee.
The senators requested Kessler respond to questions by Dec. 30.
Among other details requested, the senators asked for the number of sales-leaseback contracts Easyknock signed and the manner in which they had been administered, along with information about penalties it may have incurred
The senators also instructed Kessler to provide them a look into Easyknock’s bookkeeping, including profits earned during its eight years of existence and his own executive compensation.
As recently as February, the company was celebrating the completion of a Series D funding round, bringing its total capital raise to $430 million over six years. It also had purchased four different companies since the start of 2023.
Easyknock is currently contending with lawsuits or enforcement actions in eight states. In late 2023, it settled with the attorney general in Warren’s home state of Massachusetts, agreeing to halt all sale-leaseback programs there and to comply with regulations that typically apply to property owners and landlords.
“Easyknock’s decision to ‘shut down’ raises even more questions about how it will handle ongoing agreements and properly compensate homeowners who were negatively affected by the company’s actions,”” the letter said.
