Lawsuit Investigation: Is Unison’s Home Equity Sharing Agreement an Illegal Reverse Mortgage?

Attorneys working with ClassAction.org want to hear from anyone who lives in Florida, New York or Ohio and signed a home equity sharing agreement with Unison.

Although Unison represents that its contracts with homeowners are not loans, the attorneys are investigating whether the agreements qualify as reverse mortgage loans under certain states’ laws – and whether Unison has met those laws’ requirements for reverse mortgage lenders.

It’s believed that some homeowners may have been misled about the nature of Unison’s home equity sharing agreements and potentially paid excessive interest rates to an unauthorized lender. Now, the attorneys want to hear from people who signed these contracts as they work to determine whether a class action lawsuit can be filed to help homeowners get some of their money back.

Could Unison’s Home Equity Sharing Agreement Be a Reverse Mortgage?

A reverse mortgage loan is similar to a traditional mortgage in that it’s a financial arrangement that allows a homeowner to borrow money using their home as security. While a traditional mortgage requires homeowners to make monthly payments, ideally reducing the amount they owe over time and increasing their home equity, a reverse mortgage allows borrowers to receive money in the form of one or more lump sums, with the amount they owe going up over time and their home equity going down. In many cases, the borrower or their heirs will pay back the loan by selling the home.

Unison represents itself as a real estate investment company and advertises its home equity sharing agreement as an alternative to a reverse mortgage loan that allows homeowners to “unlock the equity” in their homes without monthly payments, interest or additional debt. Similar to a reverse mortgage, Unison’s equity sharing agreement allows homeowners to “convert[] a portion of their existing home equity to cash” via a lump payment from Unison, who places a lien on the property. At the end of the agreement, which lasts 30 years at most, the homeowner must pay back the amount they received plus or minus a percentage of the home’s change in value. According to Unison.com, the agreement ends when the homeowner either sells their home or buys out Unison’s investment.

Despite Unison’s representations that its financial arrangements are not loans, there’s reason to suspect that the home equity sharing agreements qualify as reverse mortgage loans and should be regulated as such under certain states’ laws. Some of these laws, for instance, require companies offering reverse mortgage products to be approved as authorized reverse mortgage lenders and prohibit them from charging excessive interest rates.

The attorneys working with ClassAction.org are now looking into whether Unison’s contracts qualify as reverse mortgages and, if so, whether the company is operating without authorization and charging excessive interest rates.

Homeowners File Online Complaints About Unison

Some homeowners have complained online about Unison’s home equity sharing agreements, claiming the company misled them about the terms of the arrangement and, in many cases, arguing that the agreement is really a loan with an exorbitant interest rate.

Consumers have accused Unison of “predatory lending,” with many homeowners saying they were not told that they would be essentially unable to refinance their homes due to Unison’s agreement. Others said the company “lowballed” the initial appraisal of their home in order to get a better deal, and many homeowners said they ended up paying much more in interest than they would have paid through other financial products, with Unison making a 100-percent return or more on its investment.

Below is a sampling of complaints and reviews posted online about Unison [sic throughout]:

We took out a home equity sharing loan with a company called Unison in 2019. We have since learned that they were predatory and dishonest in their marketing and promotions and understated or hid the downside risk (and even deceptively presented false financial scenarios). … We are subsequently having to pay hundreds of thousands of dollars in additional interest (literally) and may be forced to sell our house as a direct result of working with Unison. All the while, Unison has reaped a financial windfall. … When I asked Unison what governmental and regulatory agencies oversee their business, they told me they are not regulated by anyone.[ ]Unison has caused catastrophic financial loss and a great deal of emotional suffering.”
— 02/10/23, BBB.org

I should have just stuck with a standard home equity loan not this scam of a proposition.  I needed help and Unison use it to their advantage. The company is making a 200% plus return in five years. This is predatory lending at its best. A regular loan would have made sense. Once it is paid off then I still have equity. I am not giving it up and my family has nothing in the end.”
— 12/12/22, BBB.org

[I] was told by the company internet [advertisement] that they were purchasing 60% of the future value of my home when i sold. They advertised that the money ($48,750) that they gave me was not a loan and did not have to be paid back. If you view their website you will see what i mean. Also on the deed of trust it states that the money they gave me was not a loan. When i sold the home in january of this year they would not release the lien on my property unless i paid them their percentage that they purchased and pay them back the money they originally gave me. It was pure bait and switch.”
— 03/03/22, BBB.org

Unison is practicing predatory lending and avoiding interest caps by titling it’s product as an investment all the whole presenting it’s product to its target audience as a loan type facility requiring no payment until maturity. The product is presented as an alternative to a HELOC with the benefit of requiring no payments. At initiation of the loan we did some post close diligence which uncovered a low ball appraisal. We attempted to resolve this with the company. They declined to correct the value. We then asked to end the agreement to which we were told we could not for 3 years. After 2 years this product would require an estimated payment of $123K - $197K on an initial loan of $70k. Over 100% return.”
— 12/28/21, BBB.org

It is unfathomable that this is legal. I have clients who received approximately $80K about three years ago. The house was undervalued by Unison’s ‘independant appraisal’. Now, they are going to sell the house and they have to pay 70% of the ‘profit share’ to Unison. This means that if they sell at a value of about 50% higher (which is what Unison estimates that house is now worth) they will have to pay them about $275,000!! So in just three years, Unison will have made $195,000!! My clients are retired and can no longer afford the upkeep of this house. They need every penny to move into a smaller home and these theifs will be taking most of the equity from their family home. Unconscionable!”
— R. Nitke, TrustPilot.com

In a sentence: DON’T DO IT! While they claim to be your ‘partners’ in the home, basically, you have pretty much lost control of your home (except for repairs, those are, of course, all yours), and when it comes time to sell, they can block the sale if they don’t think you are getting their price, which as the market falls, is more likely. Also, improvements made that can alter their cut are determined completely at their discretion. The biggest financial mistake I have ever made...has turned out to be an 80% interest loan.”
— mvp, TrustPilot.com

How Could a Lawsuit Help?

If filed and successful, a class action lawsuit could help homeowners get back some of the money they may have been improperly charged. It could also potentially force Unison to change its business practices to comply with state laws.

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