{"id":47222,"date":"2026-03-11T21:20:25","date_gmt":"2026-03-11T18:20:25","guid":{"rendered":"https:\/\/mk.gen.tr\/unisons-home-equity-investment-faces-another-legal-battle-in-california\/"},"modified":"2026-03-11T21:20:25","modified_gmt":"2026-03-11T18:20:25","slug":"unisons-home-equity-investment-faces-another-legal-battle-in-california","status":"publish","type":"post","link":"https:\/\/mk.gen.tr\/tr\/unisons-home-equity-investment-faces-another-legal-battle-in-california\/","title":{"rendered":"Unison\u2019s home equity investment faces another legal battle in California"},"content":{"rendered":"

A San Francisco-based financial technology company is facing a class-action lawsuit that could further upend the burgeoning home equity investment<\/a> (HEI) industry.<\/p>\n

The case, filed in September in the Superior Court of California for the County of<\/strong> San Francisco<\/strong>, alleges that Unison Agreement Corp.<\/strong> uses predatory \u201cequity sharing\u201d contracts to trap homeowners in unlicensed, usurious mortgages disguised as investment partnerships.<\/p>\n

The lead plaintiff, 80-year-old retiree Patricia Gout, claims she received a lump sum of $97,256 from Unison<\/a> in 2017 to help with home maintenance and medical costs. Eight years later, she discovered she owed the company nearly $375,000, equating to an effective interest rate of approximately 34.49%.<\/p>\n

\u201cUnison sidesteps safeguards, issuing illegal mortgage loans masquerading as \u2018option\u2019 contracts,\u201d the complaint states. \u201cIts complex \u2018HomeOwner Agreement\u2019 mortgage poses greater risks than more traditional mortgages, but purports to be exempt from laws regulating mortgage lenders.\u201d<\/p>\n

\u2018Illusory\u2019 patnership<\/h2>\n

The lawsuit strikes at the heart of the HEI industry, which has grown rapidly by offering homeowners cash in exchange for a share of their home\u2019s future appreciation. <\/p>\n

Unlike traditional home equity<\/a> lenders, HEI providers like Unison market their products as \u201cdebt-free\u201d and \u201cinterest-free,\u201d claiming they are \u201cpartners\u201d who share in both the gains and losses of a home\u2019s value, the suit claims.<\/p>\n

The complaint alleges this partnership is \u201cillusory.\u201d It claims Unison uses \u201csophisticated data infrastructure\u201d to select homes likely to increase in value, while employing \u201copaque fees\u201d and \u201cconvoluted terms\u201d to ensure its own profits at the homeowner\u2019s expense.<\/p>\n

\u201cUnison isn\u2019t a partner with homeowners \u2014 as its own contract admits in fine print. Instead, it locks them into contracts under which they must pay Unison far more money than they received up front \u2014 and, in some cases, forces them to sell their homes to do so,\u201d the suit states.<\/p>\n

Thomas Scott-Railton, an associate at Gupta Wessler LLP<\/strong>, one of the law firms representing Gout, told HousingWire<\/strong> that a true partnership doesn\u2019t operate that way. <\/p>\n

\u201cPartners, as a legal term, requires obligations like acting in the other person\u2019s best interest and sharing risks and burdens, and these companies don\u2019t do that,\u201d he said.<\/p>\n

Unison, which operates in 30 states and Washington D.C., has previously stated that its equity sharing agreements are not loans<\/a> and are not currently required to be licensed as such. The company did not respond to HousingWire\u2019s request for comment.<\/p>\n

The lawsuit argues that these agreements are actually residential reverse mortgages and should be subject to California<\/a>\u2019s strict consumer protection laws, including interest rate caps and licensing requirements.<\/p>\n

\u201cThe key legal question in a lot of these cases is whether these products are actually hidden mortgages, generally, and reverse mortgages specifically,\u201d Scott-Railton said. \u201c[The company\u2019s] big fallback is that they claim they\u2019re not making mortgage loans and they\u2019re not issuing reverse mortgages. If these things are actually residential mortgage loans or reverse mortgage loans, there\u2019s no question these companies are violating the law.<\/p>\n

\u201cThere are all sorts of disclosures that they\u2019re not providing,\u201d he added. \u201cThey\u2019re not getting licensed to provide mortgages, they\u2019re including terms that are illegal under federal and state law, they\u2019re not making sure people get independent counseling<\/a>, and they\u2019re charging interest rates that violate state laws.\u201d<\/p>\n

The complaint seeks to protect a proposed class of California homeowners. If successful, it could force the entire HEI industry to restructure as a regulated mortgage product, potentially ending the high-return business model that has attracted billions of dollars<\/a> from institutional investors.<\/p>\n

Litigation in other states<\/h2>\n

This is not the first legal action of its kind, Scott-Railton said. <\/p>\n

\u201cThe first decision about this current generation of products is the Olson v. Unison decision<\/a> out of the Ninth Circuit, which was interpreting Washington state law. The three federal appellate judges unanimously ruled that Unison\u2019s product was a hidden reverse mortgage loan and a residential mortgage loan, and that the company was doing deceptive marketing.\u201d<\/p>\n

While Unison settled that case in October 2025, it\u2019s also simultaneously facing a lawsuit<\/a> from the National Association of Consumer Advocates<\/strong>, which alleges the company deceptively markets its product as a \u201cno-debt\u201d home equity option. <\/p>\n

Another HEI provider, Hometap<\/strong>, is also the subject of similar accusations<\/a> in Massachusetts, where Attorney General Andrea Joy Campbell has argued that the company\u2019s product is an \u201cillegal, deceptive, oppressive and unconscionable mortgage that violates the criminal usury statute.\u201d<\/p>\n

Scott-Railton noted that proper regulation exists to protect consumers when getting reverse mortgages, especially after the 2008 financial crisis, which exposed how devastating reverse mortgages could be if misused. The same protections do not yet apply to HEIs.<\/p>\n

\u201cReverse mortgages are not illegal in themselves. When properly regulated, people can use them, and in some cases, they might find some value in them,\u201d he said. <\/p>\n

\u201cWe created all these regulatory frameworks to try to make sure that if people were using them, it was the kind of people who understood them and might potentially benefit from them, not people who would suddenly, a couple years down the road, realize that they signed up for something that was a mortgage loan on their home, and this huge balloon payment that they didn\u2019t understand and can\u2019t pay off without losing their homes.\u201d<\/p>\n

A key element of the business model for HEI companies is that after homeowners commit to contracts, the companies bundle them into securities<\/a> and sell them to institutional investors. Ratings agencies often evaluate these securities using reverse mortgage criteria, Scott-Railton said, since they are essentially reverse mortgages.<\/p>\n

\u201cIt doesn\u2019t seem like these companies are necessarily fully disclosing the extent of the legal risk when they\u2019re doing these securitizations,\u201d he added.<\/p>","protected":false},"excerpt":{"rendered":"

A San Francisco-based financial technology company is facing a class-action lawsuit that could further upend the burgeoning home equity investment (HEI) industry. The case, filed in September in the Superior Court of California for the County of San Francisco, alleges that Unison Agreement Corp. uses predatory \u201cequity sharing\u201d contracts to trap homeowners in unlicensed, usurious…<\/p>","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/mk.gen.tr\/tr\/wp-json\/wp\/v2\/posts\/47222"}],"collection":[{"href":"https:\/\/mk.gen.tr\/tr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mk.gen.tr\/tr\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mk.gen.tr\/tr\/wp-json\/wp\/v2\/comments?post=47222"}],"version-history":[{"count":0,"href":"https:\/\/mk.gen.tr\/tr\/wp-json\/wp\/v2\/posts\/47222\/revisions"}],"wp:attachment":[{"href":"https:\/\/mk.gen.tr\/tr\/wp-json\/wp\/v2\/media?parent=47222"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mk.gen.tr\/tr\/wp-json\/wp\/v2\/categories?post=47222"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mk.gen.tr\/tr\/wp-json\/wp\/v2\/tags?post=47222"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}