Unlock agrees to restitution, compliance with Colorado laws on home equity agreements

Unlock markets arrangements in which homeowners receive a lump-sum cash payment in exchange for a percentage of their home’s future value, regardless of whether the home appreciates or depreciates. State regulators concluded that these HEA contracts function as loans subject to interest rate limits and other consumer protections — a position that other state and federal regulators are increasingly taking with similar shared-equity or home equity investment products.

Under the settlement, Unlock must:

• Follow Colorado lending laws under the Uniform Consumer Credit Code, including CEPA
• Comply with state rate caps
• Provide all UCCC-required disclosures
• Obtain required Colorado licenses before resuming operations in the state
• Make restitution payments directly to affected consumers, including additional payments as more loans close

As of June 24, Unlock has identified $283,375 in restitution owed to 125 Colorado homeowners whose contracts exceeded state interest rate limits, according to an announcement by the AG’s office. That figure is expected to rise as additional loans close in the coming months and years.

“Colorado homeowners deserve transparency and fair dealing when they make decisions about their home equity,” Weiser said in a statement. “Today’s agreement ensures that homeowners receive the restitution they are owed and that Unlock will follow Colorado lending laws going forward.”

Unlock issued a statement to HousingWire‘s Reverse Mortgage Daily (RMD) to explain its reasoning for a negotiated resolution.

“We stand behind the integrity of Unlock’s Home Equity Agreement (HEA) and our compliance with all applicable state laws. With more than 20,000 homeowners funded across the U.S., an A+ BBB rating, and a 4.8-star Trustpilot rating, our track record reflects the trust homeowners place in us every day,” the statement read.

“We chose to resolve this matter with the Attorney General’s Office because a negotiated resolution, rather than prolonged litigation, is the right path forward for our business and for the Colorado homeowners who want options in how they access their equity. We want regulation for our industry and are actively advocating for it as a member of the Coalition for Home Equity Partnership (CHEP). We believe that purpose-built regulation — that matches how HEAs actually work — is the best long-term answer for both our industry and consumers, but establishing a framework under existing law is preferable to regulatory ambiguity.

“This resolution establishes a clear cost ceiling that we can operate under and keeps the HEA product available in Colorado. As we continue to clarify how existing requirements would apply to HEAs, we remain committed to working with policymakers so that Colorado homeowners have more ways to access the equity they’ve built in their homes.”

Growing scrutiny, changing guidelines

The action underscores growing state scrutiny of alternative home equity products that have been pitched as non-debt “investments” rather than loans. For mortgage lenders, servicers and real estate agents in Colorado, the settlement signals that shared-equity agreements may be treated as consumer credit, with full application of rate caps, disclosures and licensing rules.

Nonbank equity access providers operating in Colorado will need to assess whether their products trigger UCCC coverage and CEPA obligations, while ensuring they are licensed and structured as compliant loans rather than unregulated investment contracts. Lenders and brokers should also be prepared to explain these regulatory distinctions to homeowners when they compare products like home equity lines of credit (HELOCs), cash-out refinances and equity-sharing agreements.

Consumer and secondary market demand for home equity investment products remain high even as the arrangements are being investigated and reclassified.

In May, Unlock completed the largest securitization in the space this year — a $358.5 million deal backed by a pool of more than 3,500 HEAs. The company said at the time that the offering was oversubscribed and attracted interest from a number of institutional investors, including six first-time participants in Unlock’s securitization program.

Late last year, Unlock closed a $303 million HEA securitization with the help of Saluda Grade, which issued and sponsored the transaction. That came a few months after Unlock secured $250 million from D2 Asset Management through a purchase commitment agreement. D2 also invested $30 million in Unlock through a Series B seed round in late 2024.

Unlock CEO Jim Riccitelli told RMD earlier this year that shared equity products need “purpose-built regulation.” The segment remains small, but the three largest providers — Point Digital Finance, Hometap Equity Partners and Unlock — originated 54,000 agreements between 2015 and 2025, according to research from the Urban Institute.

“The core issue is a regulatory mismatch. What’s happening with shared-equity products is what happens in category formation of any new and fast-growing product category,” Riccitelli said.

“Existing rules and regulations weren’t designed for the structure of a shared-equity product, and what we’re seeing is exactly what new financial product category formation looks like: growth, scrutiny, regulatory efforts that are at times flawed and are at times good, and then clearer definition and workable solutions.”

Editor’s note: This story was updated with comments from Unlock.

This article was written by Neil Pierson and generated with the assistance of HousingWire Automation, then reviewed by a HousingWire editor before publication.