Key facts
- Unlock agreed to pay nearly $1 million in relief to Minnesota homeowners.
- The settlement resolves allegations that Unlock's home equity agreements violated state usury caps, disclosure rules, and licensing requirements.
- Unlock denies the claims but settled to avoid litigation and no longer offers the product in Minnesota.
- The company's equity-sharing product advanced cash for a share of future home equity, secured by a mortgage.
- Minnesota's Attorney General alleged the product was an "extremely costly and illegal form of interest" and lacked ability-to-repay assessments.
Unlock has settled with the Office of the Minnesota Attorney General following allegations that its home equity agreements (HEAs) functioned as illegal mortgage loans, violating state usury caps, disclosure rules, and licensing requirements. The Arizona-based company denies the claims but agreed to the settlement to avoid litigation, stating it no longer offers the product in Minnesota. The agreement resolves an investigation by AG Keith Ellison into Unlock's equity-sharing product, which provides homeowners with a lump sum of cash in exchange for a portion of future home equity, secured by a mortgage. Ellison alleged that the product's economics constituted an "extremely costly and illegal form of interest" and that Unlock failed to verify borrowers' ability to repay, contrary to state regulations implemented after the 2008 foreclosure crisis. The settlement includes nearly $1 million in combined monetary and debt relief for affected Minnesotans, comprising direct refunds, debt relief, and funds for the attorney general's office. This follows a similar settlement Unlock reached with Colorado's attorney general in July, requiring the company to treat its HEAs as consumer credit and comply with state regulations.