Need Help Buying a Home? Fintech Firm Unison Offers Unique Assistance to Purchase the Home of Your Dreams

Are you looking at purchasing a home? Do you not quite have enough cash on hand to purchase the home you really want? If this is the case, there may be a solution to your challenge as Unison may be willing to provide a portion of your homes down-payment (up to half) – no interest or monthly checks necessary.

So what is in it for them? Effectively, Unison is investing in the home alongside the homeowner. If the value of the home goes up, Unison benefits alongside the owner. If the value of the home goes down – they shoulder the risk as well.

Unison has created a new option for homeownership beyond the traditional mortgage route. By becoming a co-investor in the house, Unison is shouldering the risk side-by-side with the owner. They are betting that housing will continue to outpace inflation representing a solid return for big investors in need of long term investments.

So what is the downside for users of the Unison service? While we have not reviewed the actual contract, at face value there appears to be few pitfalls. Buying a home is typically the single biggest purchase a person makes in their lifetime – using Unison may make purchasing a home a bit easier – if you are willing to share in the homes appreciation.

Perhaps the biggest hurdle in creating a platform like Unison is finding patient capital to provide the funding. Unison has apparently signed up a diverse portfolio of institutional money that is ready to go long and hold. While most mortgages in the US are for 30 years, expectations are for an average term of around 10 years. That is still a good amount of time.

Crowdfund Insider recently contacted Unison and discussed the platform’s vision and expectations with founder, Chairman and co-CEO Thomas Sponholtz. Our discussion regarding this new investment category is shared below.

Crowdfund Insider: Please describe the “Home Ownership Investment Category”

Thomas Sponholtz: Unison invented the home ownership investment category. In a home ownership investment, an investor provides financing in exchange for the opportunity to share in the gain or loss in the home’s value when the homeowner decides to sell – up to 30 years later. There are no interest charges or monthly payments on the financing provided. Unison made its first investment in 2007 and over the past decade has remained the leader and dominant player in the category, expanding nationwide by working with lenders, regulators, and institutional investors to integrate home ownership investing into the US housing finance system.

What sets Unison’s programs apart is partnership: we invest at the same appraised value as the homeowner, the term extends to 30 years, and we share the downside risk and upside potential with homeowners – in unison.

Crowdfund Insider: Unison is more than a few years in the making. Originally you were at Barclays Global Investors when you came up with the concept. How did you come to up with the idea for Unison?

Thomas Sponholtz: Before founding Unison, I was with Barclays Global Investors, managing fixed income and we had just built a fixed income alternative investments group as well as launched the first of many Fixed Income iShares. We managed funds for the largest pool of investable assets globally; namely pension funds, endowments and other investors with liability tied to long-term inflation.

The firm’s assets-under-management, at the time, was around $1.5 Trillion. We were the world’s largest institutional Investment Manager but we had no investments in the asset class of residential real estate. In other words, the single largest asset class was missing from an institutional investor’s optimal asset allocation and portfolio.

I wanted to allocate and invest in the asset class but there was no methodology to obtain efficient exposure; that was the initial spark that gave birth to the idea behind Unison Home Ownership Investors.

Today we have created a way to invest alongside homeowners for the benefit of both the homeowner and investor. We truly are partners.

Crowdfund Insider: Typical real estate investors are looking for income and/or capital gain with a relatively short time horizon. Who are the investors in Unison for an asset with an average hold that is expected to be 10 years.

Thomas Sponholtz: Through its Unison HomeBuyer and Unison HomeOwner programs, Unison provides long-term investment capital to homeowners and home buyers which can be used for up to 30 years. Unlike debt-based programs, such as mortgages and home equity loans, there are no interest charges or monthly payments. Instead, Unison’s institutional investors earn a return by sharing in the change in value of the home, up or down, when the homeowner decides to sell. If the home value rises, the homeowner and the investor both profit. If the home value falls, both lose.

Crowdfund Insider: Is there a social mission to your platform?

Thomas Sponholtz: Very much! For the longest time the consumers only choice of financing has been various forms of debt. By introducing home ownership investments into the financial system home buyers and home owners now have a choice that can increase their purchasing power and make their monthly payments manageable.

Unison’s programs directly address several major economic issues facing our country, including declining home ownership rates, student debt burden, over-levered household balance sheets, under-saved retiring baby boomers, scarcity of attractive investments for investors with important social mandates like pension funds and endowments and the need for private risk capital in the housing markets.

As a thought leader in residential real estate finance and a force for true financial innovation, Unison is changing the way homes are purchased and financed in America.

Our HomeBuyer program eliminates the need for costly mortgage insurance, significantly lowering the monthly mortgage payment, increasing purchasing power and enables the buyer to comfortably afford the home they 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, Unison enables them to retain a significant portion of their cash. Our HomeOwner program unlocks home equity without debt or monthly payments, enabling homeowners to pay off credit card debt, remodel their home, start a business, pay for medical bills or a child’s education, or invest for retirement. At the end of the day a home ownership investment is something all home buyers and home owners should consider.

Finally, we understand that a home purchase is more than just a financial decision. In addition to making smart financial decisions, homeowners also desire a certain lifestyle – such as having a shorter commute, living in a good school district, having enough space for a growing family. When we speak to our customers, we show an appreciation of what a home means to them and how it impacts their life.

Crowdfund Insider: Will you be creating funds for retail investors? Using Reg A+? Or perhaps a secondary market?

Thomas Sponholtz: We don’t anticipate that. We have deep internal expertise in asset securitization and due to the characteristics of the assets they do not work well in a securitization. This is a long-term investment and it’s attractive to institutional investors for a number of reasons. First, it is long-term. Institutional investors like pensions and university endowments are very long-term in their thinking. They have long term liabilities to match with concerns about hedging inflation. Residential real estate is a very good inflation hedge for them so it’s a perfect investment whereas for retail you want something with more liquidity.

Crowdfund Insider: For an individuals who want to use your service – who qualifies and who does not? Are you only looking at high growth markets? What happens if someone makes an improvement to the home? What about vacation residences?

Thomas Sponholtz: Unison reaches customers through relationships with large national mortgage lenders and real estate brokers and with sophisticated consumer direct marketing strategies. Full transparency of terms and a robust education process are the centerpiece of Unison’s highly automated, consumer-friendly, large-scale origination platform. Over the last decade, we’ve expanded the market that we created by bringing lenders, regulators, and industry experts together to make home ownership investments available in 13 states which comprise >50% of the US housing stock.

Unison HomeBuyer is available to many types of home buyers. We do evaluate certain information when deciding whether to approve an applicant, including the person’s credit history, income, and assets. Generally, we look for a debt-to-income (DTI) ratio of no more than 45 percent and a FICO score of at least 680. In most cases, home buyers who are approved for a mortgage will also be approved for a home ownership investment from Unison.

Unison HomeBuyer down payment investments are available on single-family detached homes, townhomes and condos. The home must be an owner-occupied primary residence.

Under the Unison HomeBuyer Agreement, the homeowner is always free to make home improvements as they see fit. If improvements increase the value of the home, it would not be fair to the homeowner if this increased value was shared with Unison. Therefore, when the home is sold there is a process under which the sale price may be adjusted so the homeowner receives full credit for the value of their home improvements. The amount of the adjustment is based on a third-party appraisal which determines the value of the improvements at the time of sale.

Crowdfund Insider: How automated (or not) is your service?

Thomas Sponholtz: We are different from many financial innovators in that although proprietary web-based applications and big-data technologies power the functionality of our platform, the primary thrust of our innovation was not to automate or digitize something that already existed in the marketplace.  We have developed an entirely new financial product category to solve large and important social and economic needs for home buyers, homeowners and institutional investors using proprietary financial instruments and data-driven tools incorporated into a large-scale consumer-friendly platform that efficiently connects all parties. We have built the technology and process unconstrained by the legacy issues that drag down advancement in the lending industry.

Crowdfund Insider: Currently, how big is Unison in terms of the number of deals and total mortgages? How big do you expect to become by the end of this year? What about in 5 years? What happens in a downturn?

Thomas Sponholtz: It is essential to understand that we are not a mortgage or debt provider in any way. We invest alongside the homeowner and share a portion of the change in value. There is no debt, principal balance, interest rate or monthly payments.

We are closing in on one thousand deals completed and we are projecting three thousand additional deals to be completed in 2017. This aggressive projection is possible because of our integrated Digital and Direct-to-Consumer strategies plus our new lending relationships the company has in Guaranteed Rate, Guild Mortgage, First Cal and others. With recent investment mandates that increased our total capital raised through the platform to well over $300 million, 2017 looks to be our biggest year ever.

Crowdfund Insider: How do you envision Unison evolving? Will you be adding services? What about the possibility of an exit?

Thomas Sponholtz: We will continue to lead this very large, new consumer finance category. We are constantly developing innovative financing programs that can give consumers the flexibility and control that debt would not allow. In addition, we are also developing new investment fund products which we will manage on behalf of long term institutional investors.

Finally, I built Unison as a long-term business and our daily and strategic decisions are made to cultivate the business long term. This is not a quick flip tech venture.   

States Where Unison is Available today.

  • California
  • Oregon
  • Washington
  • Arizona
  • Illinois 
  • Maryland
  • New Jersey
  • New York
  • Virginia 
  • Pennsylvania 
  • Connecticut 
  • Washington, D.C. 
  • Massachusetts 
  • Some recent milestones

    • Available in 13 states with 8 lenders, and across conventional conforming, super conforming and jumbo loan price points. 
    • Launched in July of 2016 in the conforming space with Guild Mortgage in California, Oregon and Washington.
    • In September of 2016 Unison launched in Maryland, California and Washington with First Cal.
    • In November of 2016 the Unison HomeBuyer Program was greenlighted in combination with conventional conforming loans and HomeStreet Bank in California, Oregon and Washington.
    • In January of 2017 Unison launched with Guaranteed Rate in Connecticut, Illinois, Massachusetts, New Jersey, Pennsylvania.
    • As of March 1, Unison HomeBuyer program is available in Arizona with Guild Mortgage, Guaranteed Rate, and HomeStreet Bank
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