HEI Customers File New Class Action Against Unison

Why It Matters

The outcome could force Unison to restructure its products or exit Colorado, setting a precedent for how home‑equity investments are regulated nationwide.

Key Takeaways

• Unison faces Colorado class action over home equity contracts.
• Plaintiffs allege contracts act like loans, violating consumer credit law.
• Lawsuit could void existing Unison agreements and halt state sales.
• Similar litigation in DC and Washington highlights regulatory uncertainty.
• Industry seeks specific rules as HEI classification remains contested.

Pulse Analysis

Home‑equity investments (HEIs) have emerged as an alternative to traditional mortgages, allowing homeowners to receive a cash advance in exchange for a future share of their property’s appreciation. Companies such as Unison, Hometap and Unlock Technologies market these arrangements as “partner” agreements rather than loans, emphasizing the absence of monthly payments and interest until the contract ends. Since 2018, Unison has originated thousands of contracts across states like Colorado, Washington and the District of Columbia, attracting borrowers who prefer liquidity without taking on conventional debt. However, the novelty of the product has also drawn scrutiny from regulators and consumer‑advocacy groups.

The Colorado filing alleges that Unison’s contracts breach the state’s consumer credit code by sidestepping the Truth in Lending Act’s disclosure requirements. The Kanes’ case highlights a key grievance: an $88,000 advance that could swell to as much as $279,000 upon early termination, a risk many homeowners say they were not fully warned about. If a judge declares the agreements void, Unison could lose its existing customer base in Colorado and face a ban on future sales. The lawsuit also seeks class‑action status, potentially expanding liability to hundreds of state residents.

Unison’s legal battles are part of a broader wave of HEI litigation that could reshape the industry’s regulatory framework. Recent suits in Washington State and the District of Columbia have already forced settlements and operational restrictions, prompting the Coalition for Home Equity Partnership to lobby for clear, sector‑specific rules. A definitive ruling on whether HEIs are loans or equity contracts would give lenders a predictable compliance path and protect consumers from opaque terms. Investors, mortgage lenders and policymakers are watching closely, as the outcome may determine whether HEIs become a mainstream financing option or remain a niche, heavily regulated product.