Unlock reaches deal with Minnesota AG after home equity agreements were labeled illegal

Unlock has settled with the Office of the Minnesota Attorney General over allegations that the company’s home equity agreement (HEA) products were mortgage loans that violated state usury caps, disclosure rules and licensing requirements. In the settlement, Arizona-based Unlock denies the claims, stating that it entered into the settlement to “avoid litigation” and noting it no longer offers the product in Minnesota. Under the terms, the company will pay nearly $1 million in relief to homeowners. The agreement, filed in early August, resolves AG Keith Ellison’s investigation into Unlock’s equity-sharing product, which advances a lump sum of cash to homeowners in exchange for a contractual right to a share of future home equity. Unlock, founded in 2020, entered into about 86 HEAs in the state, with advances ranging from $30,000 to $339,500, between 2021 and 2023. On average, it took an equity stake of roughly 33% in each property, secured by a mortgage that could be foreclosed upon, according to the AG’s office. Ellison alleged the economics of the product made it “an extremely costly and illegal form of interest” that far exceeded typical mortgage costs. “Homeownership is a primary...