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Home Ownership Investment: Provides Cash Financing To Homeowners On Behalf Of Investors Seeking Long-Term Price Exposure To Residential Real Estate

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Most Fintech companies apply technology to improve or speed up an existing financial service product. Unison has done something much more fundamental and impactful by introducing a completely new financial services product category called Home Ownership Investment.

Below is our intervew with Michael Micheletti, Director of Corporate Communications at Unison:

Michael Micheletti

Q: Could you tell us something more about your history?

A: We’ve been around since 2004. We introduced the home ownership investment category in 2007. Since then we have been expanding the market we created by bringing investors, lenders, regulators and other industry players together to make home ownership investments more widely available.

Q: What is Unison’s business model?

A: Homeowners have traditionally financed their homes with various forms of debt. With debt, the homeowner pays interest and makes monthly payments. A Home Ownership Investment is home financing based on partnership, and it completely changes the game. It is not debt.

A Home Ownership Investment: provides cash financing to homeowners on behalf of investors seeking long-term price exposure to residential real estate, which naturally aligns the interests of the homeowner and the investor, as partners. Home Ownership Investments were not available to homeowners or investors in the residential housing market until recently, when Unison invented and launched this exciting new category.

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Q: What is Unison HomeBuyer and how does it work?

A: As the leader in the Home Ownership Investment category, Unison provides long-term investment capital to homeowner and homebuyer clients. We invest in the home right alongside the home buyer in the form of a down payment. The client can use the capital for up to 30 years. Unlike debt-based programs, such as mortgages and home equity loans, there are no interest charges or monthly payments. Unison’s investors earn a return by sharing in the change in value of the home, up or down, when the homeowner decides to sell – up to 30 years later. As partners, we win or lose together. If the home value rises, the homeowner and the investor both profit. If the home value falls, both lose. The Unison HomeBuyer program can double a buyer’s down payment cash, which can eliminate the need for costly mortgage insurance, significantly lower the monthly mortgage payment (typically by 15-20%), increase purchasing power (by up to 100%) and enable the buyer to comfortably afford the home they really want. Millennials and first-time buyers who are burdened with high rent and student debt now have a way to become homeowners, and have greater choice over important considerations like commute, school district and home features. For buyers who already have the required down payment in hand, the HomeBuyer program enables them to retain a significant portion of their cash.

Q: What percentage of the change in value does Unison share?

A: Unison’s percentage share in the future change in the home’s value is variable depending on the amount invested and can be between 17.5% and 70% with the most common share being 35%. This share in the change in value goes both up and down. If there is no change in value we simply get our original investment back when the home owner sells.

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Q: What are your plans for the future?

A: In addition to the Unison HomeBuyer program described above we also have a program called Unison HomeOwner which allows existing homeowners to unlock some of the equity in their homes without borrowing. Clients use the cash we provide in various ways, including paying off debt, remodeling their home, starting a business, paying for a child’s education or investing for retirement.

With our two programs we can serve both home buyers and existing homeowners. We deliver significant value to our clients and solve problems that debt cannot solve. There is approximately $30 trillion in residential real estate value in the US. Roughly $10 trillion is financed with debt and the remaining $20 trillion is household equity. As our programs become mainstream Unison expects to grow exponentially. We’ll continue to lead this large and exciting consumer finance category. We’ll develop more innovative alternatives to debt that give consumers additional flexibility and control.

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