Shared-equity fintech Unison expands Midwest operations

San Francisco-based Unison is extending its reach in the heartland by expanding its shared-equity loan program to homeowners in Nebraska.

The move follows the opening of an office in Omaha earlier this year and reaching the milestone as of June 30 of having in force $6.1 billion in equity-sharing agreements with some 9,000 homeowners across 29 states and the District of Columbia.

“With our recent office expansion to Nebraska, this was the next logical step for us,” said Unison founder and CEO Thomas Sponholtz. “Due to the current market conditions, many consumers are seeking affordable housing options, and we are thrilled we can now offer greater origination capabilities in Nebraska. 

“With this announcement, we are expanding the number of consumers we can partner with to offer an option that doesn’t require interest or monthly payments.”

Unison currently operates in states bordering Nebraska to the south, including Kansas and Missouri and Colorado. Its operations also extend to the three West Coast states; the Southwest, other than Texas; and most states east of the Mississippi River. It does not yet have operations in most deep South states, other than Florida, nor in most of the Midwest states west of the Mississippi River, other than Minnesota and Missouri — and now Nebraska.

Earlier this year, Unison also completed a $443 million private-label offering backed by shared home-equity loans — with plans to pursue future securitizations as well. The company, through its fintech platform, offers homeowners the opportunity to tap their home equity without taking out a loan — via Unison’s shared home-equity product called a residential equity agreement (REA).

Prioritizing home equity solutions in a rising rate environment

The 2022 housing market has been underscored by interest rate spikes and refi decline and lenders are working hard to adjust to new borrower trends. HousingWire recently spoke with Barry Coffin, managing director of home equity title/close at ServiceLink, about the ways lenders can capitalize on these trends by revving up their home equity solutions.

“Home prices have been increasing rapidly over the past year, creating a record $24 trillion of wealth,” Unison said in announcing the securitization transaction. “… This transaction offers the opportunity for investors to access residential real estate equity and increases liquidity for homeowners across the country looking to monetize the equity in one of their most valuable assets — their homes.”

Unison, through an REA contract, advances the homeowner a portion of the equity in the property in exchange for a lien position and a share of the home’s future appreciation. Unison also shares some of the downside if the property loses value over the course of the contract. 

“Our presence in Nebraska has continued to grow since our office opening earlier this year,” added Unison President Ryan Downs, who is leading the Omaha office. “We are seeing greater interest in our solution and are thrilled to have boots on the ground where we can service our clients in person and remotely as well as tap Nebraska’s financial services and technology talent pool.”

As part of a Unison’s REA product, the company will invest up to 17.5% of a home’s value after a 2.5% risk-adjustment haircut on the value of the property. The company and homeowner then share in any appreciation, or depreciation, of the home’s value over the course of the contract. 

The homeowner has up to 30 years to pay off the initial investment, plus Unison’s appreciation cut, through a sale or refinancing of the home — or through a contract buyout after three-year lock-in period. As part of the REA, Unison’s share of the home’s appreciation can range from 20% to 70%, depending on size of the equity investment advanced. 

“We’re sitting in an equity position side by side with the homeowner,” said Matthew O’Hara, head of portfolio management and research at Unison Investment Management, which is under the Unison umbrella. “So, if the price goes up, the homeowner benefits, and we benefit as well. 

“If the price goes down, the homeowners are losing some of their equity, but we are also losing equity in our position at the same time.” 

O’Hara added that Unison’s move into the private-label securitization market supports the company’s expansion efforts because it is an optimal way to decrease its cost of financing while also creating more liquidity for originating shared home-equity contracts — with the goal of lowering REI costs for homeowners. 

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