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Homeownership investment company Unison expands reach

New partnership makes 5% down program available to more homebuyers

Unison Home Ownership Investors aims to give homeowners and buyers access to cash for the opportunity to share in their home appreciation. In business for more than a decade, the company has been a pioneer in the homeownership investment category. Now, it’s growing into new markets.

Unison recently announced that its 5% down payment program is available in parts of the Midwest and West Coast, expanding its reach to a total of 11 states thanks to a new partnership with Goldwater Bank.

The program enables homebuyers to put just 5% down on an 80% loan-to-value mortgage, with Unison providing the remaining 15% of the down payment. In exchange, Unison shares in the appreciation – or depreciation – of the home.

The 5% down program was first introduced on the East Coast in February through a partnership with Valley National Bank.

“Most people in the country are locked out of the housing market because they just don’t have enough to money to put toward a house,” said Raj Dosaj, Unison’s managing director of business development. “This means that more families can move beyond the uncertainty that comes with renting and buy the house they’ve been dreaming about.”

Unison has long been a leader in the homeownership investment category, a space that has seen an uptick in interest as home values across the country continue to rise and more companies emerge with innovative ideas to help homeowners tap their equity without taking on debt.

Based in San Francisco, Unison invested in its first home in 2007. Its launch was followed by the nation’s mortgage meltdown, but the company persisted.

“In the build out, Unison was forced to ride out the market collapse, which only strengthened our resolve and solidified our belief that the platform could survive anything," said Unison CEO Thomas Sponholtz.

Unison’s 5% down program is just one of its offerings. Through its HomeOwner program, the company invests in 5-20% of a home’s value, offering that number to its clients in cash.

Clients retain full ownership of their homes and can renovate or sell at any time. After 30 years, the deal reaches maturity and Unison takes its cut of the home’s appreciation – typically 35%. Or, homeowners can repay Unison’s investment after three years, sell or apply for an extension. 

Sponholtz said the goal is to bridge two important needs by providing capital to consumers and making residential real estate an investable asset class.

The idea seems to be resonating.

In June, Unison raised $40 million in growth capital in a Series B funding round, announcing plans to expand its team, take on new markets and develop its tech platform.

Unison Chief Strategy Officer Brian Elbogen told HousingWire the company plans to expand to 30 states by the end of 2018.

“Home price appreciation and the resulting rise in homeowner equity, combined with other macro trends, point to a growing need for more flexible solutions,” Elbogen said, adding that this might encourage others to enter the equity-release space.

Elbogen pointed to two trends that highlight the growing need for these types of products.

“For example, the record levels of student loan debt are influencing an entire generation (and their supportive parents) to consider financing solutions beyond just taking on more debt,” he said. “Another example is older Americans who have record levels of mortgage debt and are seeking more flexible ways to access liquidity in retirement.”

But Elbogen said the key to success in this category is the ability to withstand swings in the market.

“One critical factor in evaluating the long-term feasibility of new solutions is whether it is sustainable through the entire market cycle, and not just when home prices go up,” he said. “We’ve been partnering with homeowners since 2007, so we know what it takes to partner with customers through both good times and bad.”

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