Shaky capital markets have stunted the growth of equity release deals, a financing product that competes with reverse mortgages and, to a lesser extent, home equity loans.

Equity releases, also known as shared-appreciation deals, let homeowners receive cash in exchange for a share of their home's future appreciation without having to make monthly payments. Real Estate Equity Exchange Inc., the best-known provider of this product, once served 15 states, but last month, citing funding problems, it stopped marketing its product or accepting applications. The San Francisco company, which does business as Rex & Co., is still completing deals for customers who applied before mid-October.

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