Unison Homeowner Equity Access is Probably a Terrible Idea!

288 thoughts to “Unison Homeowner Equity Access is Probably a Terrible Idea!”

1. I just received Unison’s flyer as well as their online Manual. Their e-mails to me contradict both. The e-mails say that the 3.9% fee doesn’t include the very things that the 3.9% fee are supposed to be for (appraisal, title and so on) and when I accuse them of false advertising they have no logical response. All they will say is that it is 3.9% plus $300-$500 depending on your county’s fees. Then the e-mails say that the 3-year penalty marker is really 5 years (for which they will not share in any loss of value). I too own my house outright and have no one to give it to. Age 66. Income only $471 in SS Retirement which makes me ineligible for Home Equity Loan and Reverse Mortgage. I thought this might be a good deal but now I am catching them in all these lies. Plus now from reading your stories about private low-ball appraisals I don’t know what to think.

   1. You may better off selling your hoe with the caveat of being able to enjoy the money now and a clause that states you get to live rent free until you expire…worked for Hue Hefner…I am truly sorry you have no family..but if u ever need a friend just holler back…

   2. Right you are to have concern when the fees are not crystal-clear! Another unclarity is the 4-to-one ratio (it can actually be 4.7 to one! Read fine print for product). But there is far more: One might argue that the downside (value loss) risk is a strong value in this financial product. For example, if an economic downturn caused housing value losses, you could sell out incurring 53% of the loss and Unison reimbursing you for 47% of the loss. But, if the firm realized that such a trend were forming, it would pay out bonuses, etc. to the point of bankruptcy and then not make good on the loss reimbursement. Same if it were caught in the middle & did not manipulate its qualification for bankruptcy! This product is not treated in my Sep 2018 financial Planning book, The Secrets of Successful Financial Planning, but the book does treat several good and bad financial product options & conditions that cause them to make sense vs not; it also gives more emergency budget tips & resources than any financial planning book ever. I leave it to reviewers to comment, but offer it as a help to all–free of bias because I have retired and am not using it to gain clients. So, mentioning my book might get labeled as inappropriate, but it is really just to help people (my royalty is about 70 cents per book, so I have scant incentive to spam!) Pay close attention in financial decisions & steward your resources wisely to handle responsibilities & charity, not wealth building for its own sake. Best to you all!

   3. Here is what I think… I don’t care if the interest goes up to 50% in 30 years. I’ll be long dead. But if I can get $100K to use as I please now, and I don’t have to pay it back while I’m still living, sounds like a pretty good deal! My $500K equity is just sitting there doing nothing!

      1. I DID UNISON THREE YEARS AGO AND I AGREE WITH YOU. I AM 78 AND I GOT CASH TO LIVE ON AND UNISON WILL HAVE TO WAIT TIL I DIE FOR THEIR EXPECTED FUND RETURN AND THEY WILL MAKE A PROFIT. IF SOLD TODAY THEY WOULD MAKE A $50,000 ON THEIR $120,000 LOAN TO ME IN FOUR YEARS. HOWEVER, I PLAN TO STAY AND THEY ARE STUCK WITH AN AGING HOME AND THE FICKELNESS OF HOUSING MARKETS. IF SOLD TODAY THEY WOULD MAKE 10% PER ANUM. BUT THE FUTURE IS NEVER CERTAIN AND THEY MAY MAKE MORE OR LESS. I AM IN A STABLE POSITION AND THEY ARE AT RISK. AS WE KNOW FROM THE DOT.COM 80’S REAL ESTATE DOES NOT ALWAYS GO UP.

2. Reading your comments are very interesting and very accurate however you do not consider the age factor of those who continue to make mortgage payments after the age of 70. 30 years from now makes a huge difference since the average age of a person is about 80 possibly even 90 . Could be that the question is do I want live with the unused equity sitting in the bank or do I want to enjoy the great things before death.

   1. Then I would consider in your shoes a reverse mortgage. You can get money for your home as long as you have 50 percent in equity, you can still leave your kids your home and they can pay it or sell it and pay off the reverse mortgage, it would mean no house payments for you.

3. Thank you for your helpful research. I agree with a previous post – the only scenario in which this might work is as a kind of reverse mortgage for those of us not worried about living for another thirty years (and not worried about the compromised value of the house after we die).

   I’m sure Unison are not making these offers to owners of properties where they are anticipating a depreciation in the value of the property over time.

4. I also received a flyer and started checking them out. Boy do I smell scam all over this deal. Thank you for the article. I really wish there were laws preventing companies like this one from scamming people. They are getting a sweet deal off people while making it look like they are providing a valuable service. Might appear you are getting money to use now, but considering you have to have pretty good credit to even qualify, your home will no doubt be appraised very low so they can get more out of your equity, and you can probably get a straight and honest loan for less anywhere, why would anyone do this?

   1. why is this a scam? It seems like a valid service. It is just like selling a partnership in a business instead of taking a loan. And they are not getting a sweet deal. If something like the 2008 crisis happens again, they are screwed. Loans have monthly payments and interest which has its own risk. These products are equity partnership where risk is shared and they share in profit or loss.
      If I can get this cash without a monthly payment and invest in other assets that makes more return or I spread the risk of capital tied to my home to other asset classes, it makes perfect sense. This is a great service if you know how to use it.

      1. Most people’s problem is they think actually will own the house after paying it off over 15, 20 or 30 years. It will cost more making the payments on the house overtime, then the original cost purchased for. Ex. You get a house for $300,000(30 years) take away down payments then add the interest over time, it will probably run into 2 to 3 times the cost. When I saw this offer, at first it seem like insane\nutty idea and as time want it started to make more sense.

   2. I disagree with your premise.. I did use Unison and the appraisel was spot on.. I am 77years old and find getting the money now and never having to make a payment was appealing… Yes they do make money in the ideal market but has no affect on my life… If in 30 years house appreciates 30,000 they get 18,000 of the profit which I will not get because I will be dead.. My children still get remaining appreciation plus the value of house.. My house will sell for 250,000 but I will owe nothing… unison gets their share and my children get approximately about 203,000… Equity loans cost 4 to 6 percent plus monthly payment of approximately 400….Yes I am paying an exorbitant amount of interest, but get to use that 400 per month for a better quality of life for myself and my spouse..

5. I first received a voicemail message about this and then a letter. However the County recorder shows my home was foreclosed about a year ago. This is the most well documented case of foreclosure fraud that exist; a 2006 Washington Mutual mortgage backed security. Washington Mutual failed in 2008 or 2009 and went into receivership by the FDIC who sold it to Chase. However it is a well documented fact that no mortgages were included in the sale and Chase even sued the FDIC over these mortgages.

   The assignments of Deed of Trust filed by Chase is completely fraudulent and a California appeals court ruled the foreclosing bank did not produce an evidence that they owned the mortgage. This was based on the Assignment of Deed Of Trust which was not signed by the FDIC when it sold Washington Mutual to Chase. It was only signed by a V.P from Chase and simply stated the FDIC assigned the Deed of trust to Chase whcih was completely false. My situation is exactly the same.
   Chase then sold the deed of trust and note which it did not own to begin with, to Select Portfolio Servicing, Inc. SPS is a totally fraudulent company that is actually controlled by Chase through joint marketing agreements. So SPS is in fact a debt collector for Chase. SPS is a total violation of the Dodd-Frank act which the Consumer Financial Protection Bureau did not enforce. Then the Republican forced the Director to resign and turned around and repealed and replaced the Dodd-Frank Wall Street Reform Consumer Protection Act with the new Economic Growth Regulatory Relief Consumer Protection Act. This then relieved the CFPB of its responsibilities under the Dodd-Frank Wall Street Reform Consumer Protection Act whcih obligated the CFPB to take action to stop debt collection agencies disguised as mortgage servicers from operation. As regulator the CFPB had the power to revoke the licenses form companies like SPS whose sole purpose is to fraudulently foreclose on homes and essentially attempt to coerce people into selling their homes rather than loose their home to foreclosure.
   I have know received a totally fraudulent eviction notice from the Sheriff base on a totally fraudulent unlawful detainer based on the most well documented case of foreclosure fraud. In the third Appellate Court of California (Sacramento) C073207 Super. Ct. No. # 34201100097598CUWEGDS ANDREW KALNOKI et al..,Fist American Trustee Servicing Solutions, LLC et al.., and ANDREW G. KALNOKI et al., v WELLS FARGO BANK N.A. the court ruled “The foreclosing bank had offered “no evidence to establish that JPMorgan Chase Bank had the beneficial interest under the 2003 deed of trust to assign to the bank.” (Ibid.)

   This was filed on February 1, 2017 and I provided a copy of this case to First American Trustee Servicing Solutions becasue they sent me the notice of default and were hired to foreclose on my homes. Nonetheless they committed fraud and filed a Notice of Default on October 31, 2017 whcih was only 9 months after the appeals court ruled in the above cited case and then proceeded to foreclose on my home in direct contract to the courts ruling.

   Now I have just received this letter from Unison on June 22. 2019, two years after the home was fraudulently foreclosed when it Unison is only for people who own their homes. I was also served with a fraudulent eviction but this does not include other occupants so does not appear to have any value as there is no way for the Sheriff to know who the other occupants are. However Unison requires an appraisal whcih includes an inside inspection so this could be a way to establish if there is any evidence that anyone occupies the residence. It just seems very suspicions I would receive this letter from Unison two years after the foreclosure.

6. Thank you so much for doing the math this is going to cause a lot of people a lot of heartache if they did not run across your post. We just received the mail flyer and were peaked at how it worked. Saved me a lot of heart ache and gave me some really great options on ow to get cash if needed…funny how things work out it was a blessing to see your post..Gil

7. Hear me out and please, and poke holes in my plan. I think I could make this work in my favor.

   My home is worth about 450K right now. The home was built in 2006 and sold for 485K, right before the 2008 crash. That puts me pretty close to the pre-crash value. I owe about 298K on the mortgage.

   Real estate is at a high right now, and I am not saying we’re going to crash like 2008 (although possible), but we’re not going to be on a bull run like this forever. Home values can keep going up, but mush more incrementally in the coming years, unlike the past 3-5 years.

   If I maximize the equity they’ll give me, let’s round it to 75K ($78,750 is the actual number, based on home value of 450K, but I’m subtracting the 3.9% transaction fee), 70% my future appreciation is now at stake. So if my home goes up to 550K, a 100K increase, they’ll take 70K.

   Now, my plan is to take the equity and immediately invest in another real estate property. This puts me on the same playing field as they are in a sense. If the market goes up, so does my investment property. Market goes down, so does the home I own, and ultimately what I owe them.

   I plan on exiting Unison ASAP, which is three years, but I maintain the option of hanging on longer if I choose to do so based on the market at that time. I plan on exiting by selling my house.

   Do I think my home will go up 100K in three years? Heck no. 50K? Probably not. Let’s say 40K, that means their cut is 28K. By three years time, if the value goes up, there is more equity in my home after the Unison deal for three reasons;
   1) Increase in home value (50K in this example)
   2) payments against principal (about 28K, leaving my mortgage at 268K)
   3) I never took 100% of the equity available in the first place

   Getting them their money of about 105K should be cake. Sold at 500K, mortgage at 232K, minus what I owe Unison leaves me with 127K plus an investment property.

   Now, the argument is the 28K Unison got paid from my increase in home value. But remember, for the past three years, I have purchased an investment property and have been collecting rent and building equity there. I understand this all assumes everything goes well with the investment property, and I realized this is a big assumption. But none of that would have been remotely possible for me if I never did the Unison deal.

   Lastly, that example if an increase of 40K in my current home value within three years. If the value goes down? That puts me in a golden place. They share in the loss, and there’s not appreciation cut to share with them. Then it’s my call… sell my home for less than what I paid for, or sit on it until the value is where it was when the Unison deal was made. That means, I got a nearly free loan of 75K for three years (just the 3.9% transaction fee) which beats HELOC’s and Home Loans by a long shot.

   If it’s too good to be true, it probably is, but unless my estimates are way off, or I’m missing something big, this sounds like a no-brainer to me. I would love to get someones thoughts here.

   1. But take the original loan amount PLUS their stake of the appreciation in value. So I’m not sure your scenario would work…?

      1. * But they take

   2. Last September 2019 I got a flyer in the mail from Unison and decided to give them a try. I was assured over the phone I can refinance and do all the things homeowners normally do with their homes. It’s the only reason I decided to do it and I highly regret it now as this equity loan is going to have dire financial consequences. I’m finding out there’s so many rules and guidelines you have to follow in order to make sure you are not violating the terms of the agreement.

      This will be the worst financial mistake I ever made and not quite sure how to recover from it or the best way to go about what’s in my best interest in getting out of this agreement with them. I wasn’t in and dire financial stress when I got the loan just trying to consolidate bills and pay off other debtors. The sales rep convinced me this was the perfect option for me but clearly it wasn’t. I didn’t really understand I was trading my homeownership for this loan. I know they say it’s not s as loan yet in the email correspondence with my lender I’m trying to refinance they refer to it as a loan.

      I’m still confused about the agreement not fully understanding the legalities behind it all.

      Any advice would be appreciated.

      Those who are complaining they didn’t get approved are so lucky they didn’t. I wish I had been declined. They lie over the phone and once you sign the contract they own you.

8. I am 80yrs old , divorced, retired and live in Southern California, my home value is 1.2 mil. I got caught up in
   a Hero Loan scam where my property tax went from a little over $800.00 (prop 13) to over $13,000.00 a yr. This is a 30yr loan with an APR of 9.34% which I was not aware of at the time. The loan total is a little over 120.000.00, which I’ve been paying since 2016. I have quite a bit of equity in my home, but I’m wondering if Unison might be the way to go. I would be able to pay off the hero loan which is a tax lien on my home, and not be under so much stress. I would like to have any and all suggestions on my situation.

   1. It seems your unison fund will immediately return 9% plus if you use it to pay off the Hero Loan or part of it. Not bad!
      You may lose most of the appreciation of your house when you or your heirs sell, so you do have to decide if appreciation is important.
      Not knowing all of your situation, I cannot advise, but if I was 80 years old with a 9% loan to pay off and a dramatic increase on the property tax, I would think Unison was perfect for me.

9. My wife and I are 66 and 65. We plan on living in our home for the rest of our lives. Our children will be happy with whatever they have left after selling the home. Either it will lose money, in which case they would lose money regardless of Unison. If it gains, they will get the current appraised value plus 30% of the appreciation.

   Our retirement is not dependent on the appreciation of our home.

   I will be able to pay off our home with the money from Unison along with some of our retirement. I’ve calculated the loss of income from the withdrawal and find I will still have a net ~$500 positive impact.

   I am interested in people telling me where I my thinking is wrong (I really am interested).

10. Thank you for posting your insight. Although the BBB isn’t calling this company a scam they should be. People that are struggling with finances now aren’t going to be able to pay off this ridiculous loan later. Basically sounds like after 30 years they take most of the equity out of your house so you end up with probably not even enough money to purchase a new one. An interest rate of 15% -60% is robbery. Thank you so much for doing the math you are saving a lot of people from experiencing devastation.
    A saying my dad taught me “If its too good to be true it isn’t true.

11. My two cents:

    On the surface, taking one of these loans seems nuts. Let’s say your home is worth $500k and they advance you $50,000. When you sell the home or die, you or your heirs pay must share with Unison 40% of the appreciation between the $500k appraisal and the sale price. The national average is 3-5% appreciation per year. Looking at a 10-year window using the 3% appreciation number, that $500k house will be worth about $672,000 at the end of 10 years. 40% of the equity increase of $172,000, or $68,800, plus the original loan amount of $50,000 for a total of $118,800, goes to Unison leaving you $53,200. A ten-year second mortgage for $50k at 4.2% would result in a new monthly payment of $511 including $11,319 in interest and a total of $61,319 in payments. In the same 10-year window at an 5% annual appreciation rate, the $500k house would be worth 814,447. 40% of the equity increase of $325,779, or $130,312, goes to Unison leaving you $195,467. Of course, that ten-year second still only costs $11,319 in interest with an additional payment of $511 per month for ten years. Don’t forget you can deduct the $61,319 from the Unison share when comparing because you make no payments with Unison.

    Nevertheless, this leads me to conclude, in the context of an apples to apples comparison of acquiring the funds in a typical scenario for an average borrower with good credit, these types of loans ARE nuts.

    However, what if you are 70-75 years old, have tons of equity in your home, but do not qualify for a second mortgage (or know in your heart of hearts that the additional payment will be hard to make) or an equity line? What if you have recently declared bankruptcy and can’t get any kind of loan? What if all or some of the above are true and you are sick and need money for co-pays and deductibles? What if your house is urgently in need of repairs and you don’t have the cash? You need money and this may be the only way to get it.

    The truth is, there is no one size fits all judgement because there is a practically infinite set of circumstances. These loans could work for some. I recommend breaking out the spreadsheet and doing your own analysis factoring things only you could know, including a realistic assessment of your home’s likely appreciation (you could start with going to Zillow and seeing how it appreciated over the prior ten or 20 years), your likely longevity (people have a tendency to live longer than they think they will), how long you intend to stay in the house, how high you prioritize leaving your kids that home equity after you die (maybe you invested in a good education for your kids and they don’t need the biggest possible inheritance), and all the alternatives within your reach, including conventional financing and reverse mortgages.

    I would also shop around. There are other companies doing this. They’re all probably similar, but maybe not!

12. I’m 80 years old, a widow, do not have a mortgage, and I have a very high credit rating. I live in a high-end suburb of Seattle (stable home values), home built in 1999, and my current Zillow home estimate is $700,000. Baring unforeseen circumstances, I have sufficient cash and investment funds to live comfortably, but not enough to do some minor home improvement upgrades and to travel. Extra cash would allows this. I don’t plan on leaving anything to my heirs. My will gives my assets to two non-profit organizations. I am active, in excellent health, and plan to live in my home until I am forced into an assisted living arrangement. If/when that happens, I would then sell my home and use the proceeds to pay for an elder care facility. Is there a downside I’m not seeing with taking up to 17.5% of the equity in my home (even though there is a cost for this – 3.9% plus whatever). I’ve read other comments, scrutinized various Google sites, etc. and also have read the large legal document from Unison.

    There’s no free ride. A Home Equity Loan would require repayment with funds I can’t afford, and a reverse mortgage is scary for several reasons. I’d love some well-reasoned feedback. Thanks!!

    1. I would suggest a Home Equity Line of Credit. It’s similar to a Home Equity Loan, but instead of getting a lump sum that you immediately need to start paying back, you get a line of credit that’s tied to the house. As you take out, say $10k to upgrade or travel, you will have to pay it back, but obviously in much smaller, more manageable payments. HELOCs also rarely have closing costs since they aren’t really a loan, but mainly I love that I can use it as I need it instead of having a chunk that I’m constantly paying back.

       The Unison thing doesn’t seem bad in your case, but I don’t think you need to essentially sell an interest in your house. You can just set up the credit line against it and then borrow from it as you need to. Hope that helps.

13. I have the Unison offer in front of me. After reading all the great comments and suggestions, I welcome comments from anyone who’d like to share his/her thoughts. We are 76 and 75 respectively, living in a large age-restricted community. We have no children, and almost no debt other than mortgage and a car lease, and we pay our credit-card bills, mainly Amex, in full very month. Our respective FICO scores are above 815. Our combined assets, liquid and home, are about $900,000, and we have annual income of about $125K from stock dividends, pensions, annuities and Social Security. Our free-standing home was appraised for $425K in 2018, and our mortgage -the only mortgage- is about $206K. Other than each other, our beneficiaries will be designated charities.

    Subject to appraisal, the Unison offer is about $84K, which we would probably invest in interest-paying stocks if we did the deal.

    Comments and advice will be greatly appreciated.

    1. You don’t need the money then this is not for you. Not a good way to get investment capital. If you are paying off high interest debt then yes but you said you don’t have debt. So my advice is use a conventional HELOC to get investment income. if you are planning on donating to a charity(s) upon death, you can get tax benefits now by pledging that money and continue to enjoy the income until your death.
       Really, you need a one time trip to a investment advisor to give you more concrete ideas. But these two were for free!

       1. While its not a scam, its definitely not a good service either. Getting 10% of your houses value plus paying closing cost type fees to then later pay back the initial loan + an additional 40% of your houses value is an outright rippoff. If my house is worth 200k, I’d get 20k and pay whatever in fees. If I held my house for 30 years with a lower than average appreciation of a mere 2%, the house would be worth over 362k. I would owe 164k for that initial 20k loan. No thanks, I’ll take a traditional heloc or refinance any day. If I dont have equity in my house, I’d take a different type of loan.

          1. I’m looking at this loan also due to debt & need of capital. Your numbers are off though. Unison would capitalize on the increase in equity solely, This loan would cost you $64, 800 in future accrued equity + the $20k of your loan + $780 of upfront costs. So, your total would be $85,580 owed to Unison based on your scenario. Now, that is very expensive, yes, however, it may be preferred to that monthly mortgage payment and the house now being property of the bank, basically vs. a lien on your home from Unison. Any company that works on your home that isn’t paid; could also put a “mechanics lien” on your home.

          2. Hi Carl,

             I think you would only owe 40% of the appreciation of $162,000 or $65,600.

             Not quite as bad.

    2. Sounds like a horrible idea for you. You don’t need the money, why do it?

14. Although you do show an effective interest rate computation on the Unison investment, you do not counter that with the interest on the ‘new’ loan for complete comparison. There is no accrual on the unison loan. When you calculate the future interest payments on a new loan, the increased out of pocket monthly expenses of the new loan, and the differences in the costs of the two types of loans, the actual dollars do not look nearly as bad as saying this is an effective 15% loan.

    In fact, when I compared either getting a new loan or a unison loan to realize $50k of my equity, and selling the home in 6 years (using the past 5 years of property value growth in my area continuing as a guide), if I sell my home in 6 years, Even though Unison stands to see over $30k above the payoff, I would STILL see almost $40k getting the unison loan compared to a conventional refi. Time value of money accruals destroy future wealth. I think these guys have figured that out. And BTW, I figured the new loan and amortization based upon a 3.25% interest rate on a new $280k loan for my calculations. I did NOT use an artificially high rate.

15. The flyer I received in the mail is so deceptive and manipulative that I contacted my state rep (WA) who is passing the info along to the AG. The program is illegal in most states, I assume because it is predatory and anti-consumer.

    1. Every complaint I read about involves too much advertising or not being approved. I have not heard of one person who did this program and then complained. So…I doubt if its illegal. These guys seem pretty sharp ad are registered in all states to do business. It’s not a scam, just not everyone gets approved. And they send a lot of mailings. Both not illegal.

       1. I agree with you. I want to hear from someone who actually did business with unison

          1. Yes. That would be interesting. BTW I just got turned down due to my credit (700). But since there are no payments why is my credit score so important. And mine is not great but not poor either. Oh well.

16. I don’t like the replies “get a loan, get a loan”. I have a credit score over 800, but do not want to get a loan, because, with my current mortgage payment, health care premiums, and all my monthly expenses (including the $2500 per quarter for estimated income tax), i am living paycheck to paycheck. I do not have the income to make a loan payment.

17. Unison is a total scam. Ignoring all the issues about fees, fine print etc… Their basic terms suck. They are basically buying an option on 40% of the value of your home at a strike price of x% less than it is currently worth. An option that is in the money is worth the difference between the strike price and the current value plus the option value in the contract. (With a 30 year term the option value is huge!) However they are just paying you the difference between the strike and the current value and pocketing the option value! I imagine they are turning around and selling the option to an investor at a reasonable price and taking an immediate huge profit on that option value. This is a total scam taking advantage of people who don’t understand financial derivatives.

    1. Actually I think it’s worse than that. If your home value goes down below the strike price you still have to pay back the ‘premium’ that they paid you for the option. They can’t lose! The homeowner takes all the risk.

18. I maxed out my line of equity to do some home improvements on a 1940 house that needs so much work. Along the way, I also took out a project loan of $20K at 7.99% with Home Depot to get a bathroom redone which is 6 years and another $350-500 a month in order to get it paid off. I calculated I could afford the 30 year HELOC at about 4.99% because my low mortgage ($60K) will get paid off in about 7 years and I rent out part of the house and get income from that. I’m 64, still working, with no heirs (other than siblings who are older than me). I’d like to pay off the 20K and some of the HELOC loan, lower those monthly expenses, possibly pay off the HELOC or mortgage faster. House is worth 650K to 750K so there is a lot of equity in it. My credit is good. They sounded willing to loan $20K based on 60K or more in income….. I would be 94 by the time 30 years rolls around; who is left to complain about the loss in profit? My questions have more to do with their requirements for earthquake insurance (this is SF Bay Area) – another 1000 to 1500 a month depending on replacement value, and documenting improvements (by licensed contractors) — I have not legalized my in-law and I tend to not get permits. That gives me pause – I’ll have to have a different way of doing my home improvements, and maybe the not yet legalized in-law will give Unison pause!

19. why is this a scam? It seems like a valid service. It is just like selling a partnership in a business instead of taking a loan. And they are not getting a sweet deal. If something like the 2008 crisis happens again, they are screwed. Loans have monthly payments and interest which has its own risk. These products are equity partnership where risk is shared and they share in profit or loss.
    If I can get this cash without a monthly payment and invest in other assets that makes more return or I spread the risk of capital tied to my home to other asset classes, it makes perfect sense. This is a great service if you know how to use it.

20. Al,

    Sameer is incorrect. If you sell after three years below the agreed upon value when the option was taken, the amount you owe Unison is reduced. As an example if you sold for $100,00 below the appraised agreed upon value or strike price, the amount you owe Unison is reduced by $70,000. To be clear this is the gross price difference not the net price after selling fees.

    I am 79, live in the Seattle area and took out a Unison option a year ago. At the time my home was appraised for $1,200,000, the agreed upon value. In addition I have a vacation home worth $800,000. I have a 3 1/2% $300,00 mortgage on my home, the vacation home is free and clear. We are not ready to sell either property but have felt for a long time that I would like to tap some of the equity. My FICA score is 823. A reverse mortgage is a horrible idea because you are reducing you equity and paying interest on the increasing reverse mortgage. In addition a reverse mortgage is an adjustable rate so if mortgage rates go up so does your interest rate. Other options where you borrowed money made no sense since your repayment cut into your cash flow.
    To me the Unison option made sense. However, before I took out the option I had the contract checked by an excellent real estate attorney. His only advice was to check with my mortgage holder to make sure I would not violate any of the mortgage language.

    As of this posting the value of my home per Zillow has declined about $75,000 using the Zillow price at the time of the option and now. In the last few years we have had unsustainable real estate price increases in this area. The Unison option gives me some protection from a decline in home values.

    This option is not for everyone, however age is a big factor. For peace of mind I would suggest anyone taking out a Unison option have the contract looked at by a real estate attorney before signing.

    1. Hi Al,

       I am in my early 40s hope you can guide me here a bit. I agree that Unison may not apply for everyone and I recently turn down Unison offer about 2 weeks ago because my mom who is a retired math teacher disagrees with the % in the equity share as we live in the NYC area ($$$ yikes). But my plan was to buy them out in 5 years while I keep my cash flow instead of trying to find loans with all kind of interest rates to complete do my home renovations. Now now my FICO went from 800 to 710 due to shopping for loans (SMH).

       My ways of saving to pay them back was to take the home equity loan amount from our vacation home (free and clear) into Roth IRA over next the 5 years let’s say 7% return, and put the remaining loan amount into a high yield savings account plus making additional deposits every month and let it grow. But my mom keep telling me that I should not touch my retirement money to pay back Unison and pass both properties over to my daughter or grandchildren.

       I read the part where you mentioned to contact a real estate attorney not sure which documents to ask Unison since I told them no. Currently I am completing a living trust with a lawyer and I was thinking if I can ask him if he does real estate. Should I contact Unison again and have them give me their contract for the lawyer to review?

21. Here’s perhaps a novel use for Unison, although I agree that the 3.9% “cut” Unison takes is outrageous. But, suppose that you are living in an expensive area of the country, and that you have a cash flow deficit of $20k/year, but you are tied due to various commitments to living in the current area for the next 4-5 years. Assume you have over 20% equity in your home. If Unison is offering you net $80k-$100k in cash, this meets the deficit in current expenses until you are able to move to a cheaper area of the country. You are basically cashing out the equity in your home now, at a guaranteed price.

    As for the loan rate, you don’t have enough equity for a HELOC, and even *if* you can refi to cash out all your equity it’s going to be more expensive both because you will owe more and your monthly payment will be higher, and you likely will have a higher rate and/or PMI payments, which will make your cash flow even more negative. And in the end, you’ll wind up having to pay it all back anyway, so hopefully your house appreciated enough to cover it.

22. I received a flyer from Unison also and have contacted them. We also live in the SF Bay area where home prices have appreciated considerably over the years. We have approx. 700K in equity in our home. We’d like to use Unison to help out kids pay some of there student loans and buy homes. With our savings/stock/etc. we don’t
    really need the additional equity in the coming years – we are in our 60’s still working and anticipate doing that for quite awhile. After reading through this blog I’m still not sure that this isn’t sure a bad idea – it would give us the chance to use the future equity to do some good now even though the final rate may be end up costing us more.
    Thoughts?

    1. See my comment below, as I had a client in Los Gatos who into a Unsion agreement.
       I am a mortgage broker in SF Bay Area and at first thought it was a pretty cool tool for home ownership, but after seeing it in action and trying to pay off the agreement, it was shocking. Essentially received $101K and 3 years later went to payoff Unison and the payoff demand was $322K.

       I think there are better programs available to you for your plans for children that don’t affect future appreciation (esp. in the Bay Area!).

23. Can I pay back Unison before the three years up without paying a penalty

24. Hello,

    I’ve read pretty much all the posts, but didn’t see anyone in my situation. I’m a 58-year-old recent widow, in SoCA. Although not “retired”, I’m not working much due to health problems, so my income is extremely low. I have no retirement money now or in the future, except a couple $$ from SS. I also had a bankruptcy a couple years ago. I have no other debt but the mortgage. The house needs some repairs, though nothing of an emergency status, and I’d like to do some landscaping. I have only about 100,000 equity in a 800,000 home. I won’t qualify for reverse mortgage, or a regular loan, nor could I make the payments on a regular loan. I currently rent out one room and am planning on renting out another — just to make the mortgage payment. I’m thinking I could use this Unison $$$ to build an ADU in the back yard. Then with the additional income from the ADU, I could make the repairs (mostly new flooring and new exterior painting) and save $$ so I could pay off the Unison “loan” in 10 years or so. (I’m thinking the original math that brought it to 15% interest over 30 years would be less, if paying off in 10 years, but I’m not sure, maybe that’d make it worse?) The addition of the ADU, plus any landscaping or home repairs would obviously increase the home’s value, but I believe that would qualify for Unision’s Remodeling Adjustment, and so THAT increased value would be off limits to being shared with Unison. I also plan to live in my home till I die, and have no children, and plan to leave my estate to charity. So I’m thinking in MY situation it may be a good deal. But I would welcome any and all feedback to my fairly unique situation.

    1. My impression is that you cannot rent if signed up with Unison.

25. Well, I’m glad I came across this article, not precisely for its intended purpose and forewarning, but quite the opposite. I’m about to sign a deal with Unison, and I had just purchased my first home (I’m 43 years old btw) just about 4 months ago. I live in NY, and I’ve always considered ridiculous the home prices in this area, let alone the property taxes on it. I do fairly well, and yet I struggled a lot to afford the types of homes you usually find in the Long Island area. Precisely because of that, I gave Unison a lot of thought. See, money today is much more valuable than money tomorrow, and yes, there *might* be a significant “cost” (the implied interest rate from your house’s appreciation in the future) on doing a deal with Unison, but like anything else, nothing on this world is 100% guaranteed. For a house to appreciate in value, you have to AT LEAST keep up with the upkeep and maintenance, and I don’t have to tell you that’s no small feat. Everybody knows how expensive things are, hence why you don’t see a lot of renovations and maintenance going on in a lot of properties. Unison is willing to take the appraisal at face value I had done on the house I bought, so I didn’t have to pay for that again (there’s no risk discount as it’s mentioned in many of these agreements with other competitors); second, they are willing to give me 15% in exchange for 52.5% property interest (not quite the 4 to 1 ratio, so I got a little discount), and they will charge me only 2.5% originating fee as opposed to the stated 3.9%. So I’m getting a good “deal” compared to the usual agreements they make. But the crux of the matter is my personal situation. I had to pull a lot of levers to come up with the huge 20% down payment that is required to get a mortgage. One of those was to take a huge loan out of my 401k. Now you could say that was a stupid thing to do, but hear me out for a bit. My 401k was mostly in money market funds, earning almost nothing because I feel we are at or close to the peak of the economy; granted I can’t time the market but I feel a bit better having that money in a safety vehicle for now (to see your retirement funds get cut in half is no easy, no matter how temporary that might be, especially if you have accumulated significant savings) . That my 401k allowed me to take out a $50k loan to purchase my first home that is to be paid off in 20 years without incurring any of the taxes and penalties for tapping that money early is a beauty on its own. That I would pay it back with 6% interest is even better because I’m paying myself a decent rate compared to what the market has averaged over the long term. However if anything goes wrong with my current employment I’m on the hook to pay that off immediately. I’m also starting a family (have two kids less than 4 yrs old both) so my monthly expenses are piling up. My problem after having purchased my first home is liquidity, I’m of the idea to always have a cushion for the down times, and at this point I can barely afford any extra savings, so basically I’m living paycheck to paycheck (well, sort of, since I’m still contributing the maximum limit to my 401k). I also have a taxable investment that is taking it on the chin right now, and to afford the down payment I had to sell some of that money, incurring in a significant loss, so that was a bit hard to swallow. Should I have the need to come up with an emergency, major expense, or big home repair (and anyone owning a home can attest how easy it is for something like that to happen in a blink) I’d be in big trouble. Not only I’m out of liquidity but I would have to sell more of my taxable investment and incur in even bigger unrecoverable losses. So Unison is coming handy here.. I can use that money right now not to increase my lifestyle, but to use it wisely in three objectives: 1) have the 401k loan money ready to pay it back should the need arises; 2) have a significant emergency fund that will provide me quite a bit of relief; and 3) deploy some of that money in that investment fund that is in the doldrums so I can lower my average cost a bit and have a better prospect of recouping that money somewhat sooner (if at all!). So yeah, my house could appreciate significantly 30 years down the road (and at that point, it’s guaranteed I’d sell my home and move somewhere else a lot cheaper if not sooner – that’s of course if I’m still alive). I think that counting on your house to be your golden egg 20-30 yrs down the road is ludicrous, I’d rather do something better with my money to make it grow today than wait for it 20-30 years, if I don’t die sooner that is. I won’t mind AT ALL sharing a significant appreciation with Unison because they provided me a significant cash cushion early in my life, when the need of additional liquidity and emergency savings were badly needed. But, to comment on some of the arguments of this article, yeah, in a way I’m also making a “bet” against the future vale of my house. That house had appreciated ridiculously to pretty much unaffordable-for-the-majority-of-people level, do I expect that much appreciation 10 years down the road? Hell no, I could barely afford it and I do pretty well. This is clearly unsustainable, something’s gotta give. Whether I do the deal with Unison or not, I have to live somewhere and provide for my family, I’ll be spending a lot of money on maintenance and repairs anyway, so that’s already in the picture and it’s the cost of just living as a homeowner. I can’t expect my house to provide the majority of my future retirement. Should I leave it to my kids? Well maybe, but then again I’m doing my best to prepare them to make it on their own, otherwise I’d be wasting my money. Given I currently have a liquidity and cash-flow problem, Unison’s terms could not have come at a better time. I don’t have to worry about paying back that money for as long as I want to (well, 30 years when I’ll be 73). If I die, that house SHOULD be sold immediately and the mortgage paid off as well as Unison’s interest, and my family should move somewhere else cheaper and more affordable with my life insurance proceeds and the proceeds of the house (that’s of course if the house didn’t depreciate significantly at that moment, and having Unison sharing some of that depreciation would come in handy). That Unison expects my house to appreciate in value in the future hence why they are doing this with me? Of course, so do I. But nothing over the long term is guaranteed so I better make my moves today rather than tomorrow, with some planning for the future of course.

    I think Unison’s deal is very good in certain scenarios, you just have to give it some thought and weigh the pros and cons for your particular situation regardless of the “effective cost” in the future compared to other alternatives. Do you know what I had on mind I’d have in assets at this age 15 years ago? Did it pan out? could I have done something differently for it? All rhetorical questions and you know the answer already. Luck plays a significant roles in our lives so you better get used to that, I don’t have to tell you how much I’ve prepared myself and how hard I work in general yet many things do not pan out as I had expected.

26. Our issue is a Huge condo assessment $145000 that is an additional $900 a month. That is a rather large loss of equity and putting us in precarious spot. We are 61 and 67 and only I am working. Can’t refi and include the assessment. So this is an option possibly. Our home will go up in value when renovations are complete. But it’s taking so long to complete them that our debt level is getting dangerous. But thank you fir the analysis. Best one I’ve seen showing real rare of interest. Anyhow exploring lots of options right now.

27. So I’m a mortgage broker in the San Francisco Bay Area. I was refinancing a client in 2018 and noticed they had a REX agreement w/ Unison. I am trying to figure out the effective interest rate he would have been paying, had he been able or willing to payoff the agreement he entered in October 2015.

    Details:
    Received 106K less fees, netting 101K
    12.5% share and 50% future value change based on an “Agreed Value of $850K” – not sure there was even an appraisal.
    REX Purchase Price – $425K
    REX Down Payment $106,250
    REX Purchase Price Balance – $318,750
    Less: REX Purchase Price Adjustment – ($15,938)
    Adjusted REX Purchase Price Balance – $302,812

    Went to refi him in August 2018 and requested a payoff amount from Unison.
    My appraisal just under 3 years late, yielded a value of $1.250 Mil !!!

    after 50 % Investor Percentage
    Investor Share $625K
    Less Purch Price Balance ($303,812)

    Total Amount due to close agreement….. – $322,188 !!!

    That’s pretty steep. Can anyone tell me how to figure out the APR he paid for just $106K?!

    In any event, I would use this product personally, and I am very scared to offer the option up to clients. I might mention it, say it’s an avenue to home ownership, but contact a financial adviser AND and attorney to understand the full ramifications to future value and return on investment.

28. Seems to me Unison is worth seriously considering if you plan to live in the house 20 years plus (unknowns win out over today’s costs), or you need cash today to pay off other loans or whatever (immediate benefit evident). Playing Unison as a 3 or 5 year game seems risky.

29. I’ve read some of the comments and if I am repeating something someone already said, I apologize. I didn’t read ALL of the comments.

    I have a Unison Home partnership agreement on my home. I needed the cash, and it helped when I needed it to. I’m a year and a half into my minimum 3 year commitment. I still have approximately $90,000 equity in my home, and I have applied for a HELOC loan with more than one lender. Every single lender has told me that they will not loan me money (either a refinance or HELOC) with the Unison agreement in place! I’m screwed. I have to either pay them back and beg to be let out of my contract (yeah, like that’s going to happen!), or I’ll have to sell my beloved home for the same exact amount I bought it for, and that it was appraised for when I entered into the contract with Unison. I am more than happy selling it for what I paid less than 2 years ago, knowing that Unison will not receive any profit, and I will only have to pay them back the loan they made me. I still have $90K equity, after Unison is paid back.

    So, if you are considering entering into an agreement with Unison, bear in mind that no lenders (at least none I could find) will refinance your mortgage or give you a HELOC loan while Unison is your partner.

    Had they informed me that I wouldn’t be able to refinance with them as my home ownership partner, and pull out the equity I have in MY HOME, I would have never partnered with them. This seems somewhat illegal, in a way, although I’m sure there’s nothing I can do about it.

    Just a heads up. Again, sorry if I repeated something someone already said.

    1. It seems UNISON is offering up a pretty tempting deal with no payments until the end of the first mortgage to 30 years, and I understand no interest payments. Seniors should look into comparing a few lenders of reverse mortgages however. In spite of what one person commenting claimed, it can be a great deal for some Seniors. At least one person, assuming 40% of future equity to UNISON per average equity increase over 10 years, along with the initial high cost of the loan figured an equivalency of having a loan at 15% interest. If one needs to get urgent work done on their home and has no other way of getting good financing, it may be worth the cost. I understand they were working on broadening the number of lenders who would refinance their client’s first mortgage per UNISON’s subordination agreement. COVID 19 no doubt put a damper on that. All lenders are more skittish now due to COVID 19 an probably UNISON too,

30. This article is helpful, i was in a position last year where i had bad credits and needed loans for my olive business. I was getting terrible rates so i pulled out, I got a professional man whose name is (JACK BERRY) on Wickr who introduse to ma a microfinance bank of 3% that helped me work on my credit score and records. Now i have applied for the SBA loan, i got my grant early last month their mail([email protected])

31. My girlfriend and I purchased our first home in April of 2020 about two months later we received a letter from Unison stating that we needed to pay $70,000!! Apparently the a previous owner entered into a REX agreement with Unison in 2007 but never satisfied the loan when he sold the home to an investment company ,who flips homes, which is who we purchased the property from. We are confused with the situation and need a bit of guidance, had anyone seen or been through something similar?

    1. Either your title insurance or your attorney should have protected you from this situation, which is “not having clear title” to the property. You need to contact the attorney you used for the closing or the title insurance company (or both). Good luck.

32. The annual rate of return to Unison’s investors depends only on the average annual appreciation in the property’s value and the number of years the Unison agreement is in effect (from initiation to the time the property is sold). This rate of return is the implicit compounded interest rate that you are paying on the funds you borrow from Unison.

    Two additional caveats regarding Unison versus conventional loans:

    1) Unlike regular home mortgage interest, the amount that Unison receives as its “share” (in lieu of interest) of the home appreciation is NOT tax-deductible.

    2) At the time of sale, the homeowner is liable for capital gains tax on the ENTIRE amount of appreciation — including Unison’s share. (Although up to $500,000 of the capital gain may be excludable once every five years.)

    I’m sorry I can’t figure out a way to enter a table here to summarize the results of my analysis. But imagine a table with rows representing number of years until you sell the house and columns representing the average annual appreciation of the house’s value from the time you take out the loan to the time you sell.

    If you sell after 5 years, here are the effective interest rates you’re paying on the amount borrowed, for the following average annual appreciation rates (compounded):

    2% appreciation: 7.8% annually
    4% appreciation: 13.9% annually
    6% appreciation: 19.3% annually
    8% appreciation: 24.2% annually

    If you sell after 10 years, here are the effective interest rates you’re paying on the amount borrowed, for the following average annual appreciation rates (compounded):

    2% appreciation: 6.8% annually
    4% appreciation: 11.6% annually
    6% appreciation: 15.6% annually
    8% appreciation: 19.2% annually

    If you sell after 20 years, here are the effective interest rates you’re paying on the amount borrowed, for the following average annual appreciation rates (compounded):

    2% appreciation: 5.7% annually
    4% appreciation: 9.3% annually
    6% appreciation: 12.2% annually
    8% appreciation: 14.9% annually

    If you sell after 30 years, here are the effective interest rates you’re paying on the amount borrowed, for the following average annual appreciation rates (compounded):

    2% appreciation: 5.0% annually
    4% appreciation: 8.1% annually
    6% appreciation: 10.6% annually
    8% appreciation: 12.9% annually

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