Amazon Employees Can Now Use Their Company Stock To Secure Home Loans

Amazon (AMZN) employees will soon be able to use the stock they own in the company as collateral when applying for home loans through online lender Better.com.

The program, dubbed “Equity Unlocker,” will be available in New York, Washington, and Florida, according to Better. Current and former employees who have vested equity in the company will be the first to have access to the program in those states.

“At Better, our mission is to make homeownership cheaper, faster, and easier for all Americans,” Better CEO and founder Vishal Garg said in a statement. “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."

The program, which allows Amazon workers to pledge, but not sell their stock, to make up the down payment, will charge a higher interest rate on mortgages taken out by Amazon employees, according to the Wall Street Journal. The borrowing cost will be anywhere between 0.25 and 2.5 percentage points above the normal market rate, depending on how the employee structures the down payment.

"Previously, Amazon employees would have had to sell their equity to afford a home or take out a potentially costly, daily mark-to-market margin loan against their Amazon stock," Better said in its statement. "Unlike traditional methods, Better Mortgage’s Equity Unlocker product is non-mark-to-market and non-recourse, meaning that the terms of the loan won’t change with the stock market."

Nick Taylor, the head of real estate at Better, told HousingWire that the companies have been in talks about the program since the middle of last year. The digital lender said it noticed many Amazon employees were already using their services for funding home purchases, with the company funding more than $1 billion of loans for Amazon employees. Equity compensation was a specific concern of Amazon employees. 

“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 share prices for Amazon will determine the equity's value for potential buyers and will lock in the rate from there. 

“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.