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Today I received a mailing from Unison, which claims to be a "homeownership investment" company. Their sales pitch is that they grant a 0%-interest loan to homeowners in exchange for a partial equity stake. I'm not particularly interested in participating in this (even assuming it's legitimate), but I have a few questions about it anyway:

  1. Is it legitimate?
  2. What are the risks to the homeowner and to the investor? What happens in case of foreclosure, for example?
  3. What are the benefits to the homeowner?
  4. Who should participate in this sort of investment?

It's certainly an interesting investment mechanism (for both the homeowner and the underwriters of the loan) but I'm wondering what the real cost/benefit is, here.

The offer letter itself also seems very scammy to me; for example, it opens with:

Do you wish you could access the equity locked in your home? With uUnison, you can receive $[xxx] and use the funds for any purpose you choose with no monthly payments and no interest charges. Yes, you read that correctly. It's almost too good to betrue[sic].

Even if it's legitimate, I suspect the value would be based on a current appraisal or tax assessment, which is also much lower than the actual market rate in my particular housing market, so it seems like an easy win for them and a long-term loss for me no matter what.

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    Sounds more or less like a reverse mortgage. – pboss3010 May 7 at 11:31
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    It doesn't actually look like a scam to me. They lend you money. Instead of charging you interest, they expect a share of the gain in the value of your house when you sell it. That extra payment could be more than the interest on a simple mortgage. – Simon B May 7 at 15:11
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The math on buying a home for a homeowner is that you need to spend money on bills/repairs/etc, but in exchange your house goes up in value. (Usually.... There's also the whole "place to live" thing, but this is the money Stack Exchange site.)

But, what if you could buy a home, not pay any bills, or do any repairs, and still have the house go up in value? That deal sounds a lot better, right? Well, that's the deal unison is asking for. If they buy a 10% share in your house, they're not buying a 10% share of the bills. Those are still fully your responsibility, even though financially you're only getting 90% of the reward.

In addition:

  • It looks like this could cause trouble if you later need to modify your mortgage or get a home equity loan, mostly because getting a mortgage for 90% of a property is weird, and banks don't like weird.
  • It looks like the loan is really for a 10 year period, and if the loan lasts longer than that, they'll want their money back, with appreciation. Don't have the money? No problem, they'll be perfectly fine renewing for another 10 years. (For a fee.)

In general, this looks like a home equity loan, but worse. I assume there are people who would find this useful, but it's being marketed to a much wider audience that could be better served by different products, and is generally more exploitative than it needs to be.

  • Maintenance & repairs MAINTAIN the value of the house. Only if you spent money on remodelling or additions would you expect an increase in value from the work. Generally, the increase in value (or sometimes decrease, as in Detroit) comes from the housing market, especially in places like the SF Bay Area where demand outstrips supply. – jamesqf May 8 at 4:21
  • Thanks, this answer does a great job of pointing out an angle I hadn't considered and definitely makes it make sense from the investor's POV - and now it's even less interesting from the homeowner's. – fluffy May 8 at 20:18

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