What are the other core requirements of the agreement?
Unison has a few rules the homeowner will need to follow to help ensure success for them and Unison.
- Keep their home as their primary residence (for owner-occupied properties). This means living there at least 180 days/year and not being away for more than 60 consecutive days.
- Keep all house-related payments current. Make sure any home-related payments are made on time. This includes the mortgage, property taxes, and insurance payments.
- Maintain proper insurance. Unison requires our customers to maintain hazard insurance on their homes equal to the home’s value. It must include fire and any additional hazards typical for their area.
- Keep the home in good condition. Any serious defects and repair issues should be handled prior to sale. In instances where our customers fail to maintain their property (or if a pre-existing defect is not addressed), Unison will apply a deferred maintenance adjustment when the agreement ends.
- Keep Unison informed of major changes.
- Selling or transferring the home
- Having a lien placed on the home
- Filing for bankruptcy
- Fire or hazard damage
- Receiving a notice of condemnation
- Anything else impacting the home’s value, including remodeling
- If a non-signatory to our agreement becomes an owner or principal resident
- Allow aerial photography of the property within a few weeks of closing with Unison, Unison will send out a small team to capture aerial photos of the property. This completes the property documentation along with the inspection and appraisal information Unison collects before closing. All of this info is kept in a personalized online portal the homeowner can log into anytime.
What disclosures do you provide to consumers?
As a new financial product, Unison must inform consumers about our agreement, including:
- A Program Guide, detailing the economics of the agreement
- A Program Knowledge Review with an online tool that details the economics and mechanics of the agreement
- An Offer Letter, which goes into detail about the consumer’s obligations under the agreements
Do you subordinate?
Unison’s subordination agreement explains that Unison won’t interfere with any default-related actions the first position lender takes.
How is Unison’s interest protected?
Unison protects our interest by recording a security instrument. Unison appears on a title report as an entity with an interest in the property. Any subsequent liens would be subordinate to Unison. Contractual obligations also help protect Unison’s interest. For example, the homeowner is obligated to maintain their Maximum Authorized Debt Limit (MAD). This is essentially their first position balance when the homeowner buys their home. Exceeding their MAD would mean Unison would not subordinate to the new position and move into first position, likely preventing the transaction from taking place. This enables Unison to ensure that the equity in the property is not taken up by a reverse mortgage or other transaction that could reduce equity in the property. This is also a credit enhancement for the first lien holder.
What happens if the homeowner needs to sell their house early?
As the owner of their home, consumers are free to sell it at any time. However, Unison recommends that homeowners only partner with us if they plan to live in their home for at least three years for HomeBuyer and five years for HomeOwner. If homeowners unexpectedly need to sell before three or five years respectively, Unison would not share in the loss and the homeowner may not qualify for a remodeling adjustment.
What happens if the last signatory on the agreement passes away?
If everyone on the agreement has passed away, Unison’s customer’s heirs (or estate) will need to end the agreement by either selling the home or paying Unison the value of Unison’s interest in the home. Unison will provide a reasonable amount of time for the customer’s heirs (or estate) to decide. Unison strongly recommends that homeowners discuss their Unison HomeBuyer agreement with their family and heirs before signing it. The agreement has the potential to impact family members who live in the home, but who are not co-owners. Because the last signatory’s death requires the house to be sold or a payment to be made to Unison, this can affect the customer’s heirs or family member’s ability to remain living in the home. Unison may ask the homeowner to verify (in writing) the names of any non-signatories living in their home, as well as confirmation that they’ve explained their Unison HomeBuyer agreement to any non-signatories living in the home. In rare cases, the proceeds from the home sale may not be enough to cover the selling costs, remaining mortgage balance and final payment to Unison. Usually, this only happens when the home has lost value and the homeowner hasn’t built up very much equity through monthly payments. If this happens, the homeowner’s estate is still responsible for their payment to Unison.
What is the Unison mortgage and deed of trust? Doesn’t this make you a loan?
Although this looks a lot like a security instrument that secures a debt, the Unison mortgage and deed of trust alerts the public that Unison has an option interest in the property. Unison did this intentionally to ensure that recording the security instrument is as smooth as possible. Unison does not secure either the initial payment Unison makes to the consumer or a specific amount to be repaid. Unison simply secures the performance of the obligations under the covenant and option agreement. The Unison mortgage will be recorded in second position as a subordinate lien using the home as collateral for Unison’s option contract.
How does Unison service its programs?
Unison programs have a 30-year term. No payments are required to Unison during this time and minimal interaction is required between Unison and the homeowner. As a courtesy, Unison sends quarterly statements to the homeowner to remind them of the Unison agreement and provide information about the company. Unison’s home partnership team processes all requests related to any of the transaction-ending events.
Does Unison appear on title to the property? How does anyone know if a property has a Unison agreement on it?
Since Unison has no present ownership interest in the property, Unison doesn’t appear on title. However, just like a lender, Unison would appear on a title report as a party with an interest in the property.