Unison began in high-price markets like California, so most people using the program are at least in their 40s with incomes between $75,000 and $150,000. The company said it expected those numbers to fall now that it had branched into different areas.
THE PROCESS. Unison teams up with specific lenders that home buyers must work with. Applicants must qualify for a mortgage, and the home must be one that Unison wants to invest in. That generally means it has to be “typical” for its neighborhood. A McMansion on an acre plot amid more modest homes may not qualify.
The company will invest in single-family and multifamily homes with up to four units, and in townhouses and condominiums. To discourage the quick flipping of properties for a profit, Unison requres buyers to occupy the properties, but they can sell whenever they want.
THE STRUCTURE. Unison’s portion of the down payment is not a loan. No payments are made; no interest accrues. The company’s agreement with a home buyer is structured as an option contract, with its investment effectively giving it the right to buy a stake in the home at a later date, typically when it is sold or after 30 years, whichever comes first. So if the company contributes half of a down payment, it collects over a third of any appreciation in the home’s value (in addition to the original sum it invested).
A homeowner can sell at any time, but Unison absorbs a loss only after three years of ownership. Alternatively, the homeowner can buy out Unison’s share — at a price based on an independent appraisal — although that is permitted only after three years. In such instances, Unison does not share in any losses.
THE RULES. Homeowners generally cannot draw on their home equity beyond the amount of the original mortgage. And they must cover the entire cost of any renovations, although Unison credits the value the work adds to the home’s ultimate sale price. Conversely, there can be repercussions if a home is not well maintained.
In the event of default, Unison — which places liens on the properties it invests in — has the right to foreclose to protect its stake. More often, company executives said, it may step in to help settle arrears and to initiate a more orderly sale — at a price.