Shared-equity fintech Unison expands its Midwest business
San Francisco-based Unison expands its reach to the heart by expanding the shared equity loan program to homeowners in Nebraska.
The move follows the opening of an Omaha office earlier this year and reached the June 30 milestone with $ 6.1 billion in share-sharing agreements with about 9,000 homeowners in 29 states and the District of Columbia.
“With our recent office expansion to Nebraska, this was the next logical step for us,” said Unison’s founder and CEO Thomas Sponholtz. “Due to current market conditions, many consumers are looking for affordable housing options, and we are excited that we can now offer greater origins in Nebraska.
“With this announcement, we are expanding the number of consumers we can work with to offer an alternative that does not 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; southwest, other than Texas; and most states east of the Mississippi River. It does not yet operate in most deep southern states, other than Florida, nor in most of the Midwestern states west of the Mississippi River, other than Minnesota and Missouri – and now Nebraska.
Earlier this year, Unison also completed a $ 443 million private bond offering backed by shared mortgages – with plans to pursue future securitizations as well. The company, through its fintech platform, offers homeowners the opportunity to leverage their equity without taking out a loan – via Unison’s shared residential equity product called a Residential Property Agreement (REA)
“House prices have risen rapidly over the past year, creating record highs of $ 24 trillion,” Unison said in announcing the securitization transaction. “… This transaction gives investors the opportunity to access residential real estate shares and increases liquidity for homeowners across the country who want to monetize the equity of one of their most valuable assets – their homes.”
Unison, through a REA contract, promotes the homeowner part of the equity in the property in exchange for a mortgage position and a share of the home’s future increase in value. Unison also shares some of the disadvantage if the property loses value during the contract.
“Our presence in Nebraska has continued to grow since our office opened earlier this year,” said Unison President Ryan Downs, who heads the Omaha office. “We see greater interest in our solution and are excited to have boots on the ground where we can serve our customers personally and externally, as well as take advantage of Nebraska’s financial services and technology talent.”
As part of a Unison REA product, the company will invest up to 17.5% of the value of the home after a 2.5% risk adjustment of the property’s value. The company and the homeowner then share in any increase in value or impairment of the value of the home during the contract.
The homeowner has up to 30 years to pay down the first investment, plus Unison’s value cut, through a sale or refinancing of the home – or through a contract acquisition after a three-year lock-in period. As part of REA, Unison’s share of the home’s value increase can vary from 20% to 70%, depending on the size of the advanced equity investment.
“We are in a share 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 from that too.
“If the price goes down, homeowners lose some of the equity, but we also lose equity in our position at the same time.”
O’Hara added that Unison’s transition to the private label securities market supports the company’s expansion efforts because it is an optimal way to reduce financing costs, while creating more liquidity for the origin of shared housing contracts – with the aim of lowering REI costs for homeowners.
