Is the most innovative insight in mortgagetech doing away with the idea of the mortgage in the first place? After listening to Unison the answer might surprise you.

“Homeowners have traditionally financed their homes with various forms of debt,” Jim Riccitelli, Co-CEO of the mortgagetech innovator, Unison, explained. “With debt, the homeowner pays interest and makes monthly payments. A Home Ownership Investment is home financing based on partnership, and it completely changes the game. It is not debt.”

Unison has developed a new financial services category – home ownership investing – which, in addition to providing new opportunities for investors, helps potential homebuyers manage and overcome the traditional challenges to financing a home purchase. The company’s Home Ownership Investments provide cash financing to homeowners for up to 30 years. And instead of a monthly payments or interest charges, Unison’s investors earn returns based on the change in value when the homeowner sells the property. Hence the partnership. “If the home value rises, the homeowner and the investor both profit,” Riccitelli said. “If the home value falls, both lose.”

Pictured (left to right): Co-CEO Jim Riccitelli and Director of Engineering Neal Behrend demonstrating Unison HomeBuyer and Unison HomeOwner at FinovateSpring 2017.

He adds that combining traditional financing with home ownership investing can be a powerful resource for homebuyers, especially those struggling to save enough for a downpayment in any one of America’s soaring housing markets. “A home ownership investment can double a buyer’s downpayment cash, which can eliminate the need for costly mortgage insurance, significantly lower the monthly mortgage payment, and enable the buyer to comfortably afford the home they really want,” Riccitelli said.

Home ownership investments can also help existing homeowners retire debt without incurring additional debt via consolidation loans and similar debt-incurring tactics. This product, the Unison HomeOwner Program, can also fund the launch of a new business, cover the costs of home remodeling, or pay for educational expenses for the kids. “All without adding to their monthly payment burden,” he explained.

For investors, Unison provides a long-term investment opportunity in residential real estate, the largest asset class in the U.S. Riccitelli points out that residential real estate is especially attractive to institutional investors who have long-term time horizons and a preference for inflation-hedging or inflation-beating investments. “For the first time ever, Unison’s HomeBuyer and HomeOwner programs have made residential real estate an investable asset class for institutional investors who represent the largest pool of investment capital in the world,” he said.

Company facts

• Founded in 2004
• Headquartered in San Francisco, California
• Won Best of Show at FinovateSpring 2017 for its Unison HomeBuyer, Unison HomeOwner programs

We met with Co-CEO Jim Riccitelli (pictured) and Director of Corporate Communications Michael Micheletti at FinovateSpring and followed up with a few questions by e-mail. Below are the responses.

Finovate: Who are your primary customers?

Riccitelli: On the consumer side, we help first-time buyers, millennials, trade up and trade down buyers, across all price points, in most of the major metropolitan areas in the country. We help them in the following ways:

• We make it much easier for the buyer to income-qualify for the mortgage loan needed to purchase the desired home.
• We enable the buyer to purchase the desired home with a lower monthly payment (typically 15-20% lower).
• We can increase the buyer’s purchasing power by up to 100%, allowing them to choose the home they really want versus settling.
• We can enable the buyer to retain cash after closing for important life needs such as college tuition, home remodeling, starting a business, investing for retirement or just as a cash cushion for a rainy day.
• We allow the buyer to show a stronger offer (with a larger down payment), making them much more competitive in tight housing markets.

We also help existing homeowners unlock a portion of their home equity without borrowing, and without monthly payments or interest. They can use the cash for any purpose, including paying off debt, college tuition, home remodeling, starting a business, investing for retirement, or paying medical bills.

On the investor side, our customers are institutional investors, such as pension funds and university endowments, who have a natural need for long-term price exposure to residential real estate, the largest asset class in the United States. This asset class is particularly attractive to these investors who have a long investment horizon and an investment objective of hedging or outperforming inflation. For the first time ever, Unison’s HomeBuyer and HomeOwner programs have made residential real estate, the world’s largest asset class, an investable asset class for institutional investors, who represent the largest pool of investment capital in the world.

Finovate: How does your solution solve the problem better?

Riccitelli: Due to the game-changing nature of our innovation, we don’t just solve a problem better, we solve it in the first place; it was not previously solvable without our innovation.

On the consumer side, we provide very-long-term lump-sum home financing that enables more families to purchase homes and helps existing homeowners finance life needs, all without added debt and without monthly payments.

On the investor side, we make the largest asset class in the world, residential real estate, an investable asset class for the largest investors in the world, pension funds and university endowments, who have an investment objective of hedging or outperforming inflation and have a natural need for the exposure.

Finovate: Tell us about your favorite implementation of your technology.

Riccitelli: We have so many happy homeowner success stories that it’s difficult for us to name a favorite. But here’s a recent one as an example.

Finovate: What in your background gave you the confidence to tackle this challenge?

Riccitelli: Our team has a deep background in investment management, real estate, home finance, operations, and funding and building startup businesses, and that certainly gives us confidence. But we knew how difficult and lengthy the process would be to build something so revolutionary; that results in dramatic changes in a highly regulated industry where change is so hard to promote. So more than anything, our spirit of entrepreneurism and our sense of commitment and perseverance gives us the confidence we need.

Finovate: What are some upcoming initiatives from your company that we can look forward to over the next few months?

Riccitelli: We have several new programs coming, including programs for rental properties and homeowners with lower credit. We also have some very exciting things in the works that we will introduce to the world in 2018, including another revolutionary home purchase finance program and a program designed for retiree homeowners. Stay tuned!

Finovate: Where do you see your company a year or two from now?

Riccitelli: We’ll continue to lead this large and exciting consumer finance category. We’ll have many thousands of happy customers and be well on our way to making Home Ownership Investment a mainstream financing tool. We’ll expand our geographic footprint. We’ll also be introducing a few more innovative alternatives to debt that give consumers additional flexibility and control.

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Unison Co-CEO Jim Riccitelli and Director of Engineering Neal Behrend demonstrating Unison HomeBuyer and Unison HomeOwner at FinovateSpring 2017.