If your YouTube feed, podcasts, or social media timelines have recently been flooded with ads promising a “no-debt” way to tap your home equity, you’re not imagining it. Home equity investment (HEI) companies have dramatically ramped up their marketing over the past year, pitching what sounds like a simple alternative to traditional borrowing: no credit checks, no monthly payments, and no interest.
And if there’s one thing we know, it’s that the American consumer’s appetite for more cash and spending is voracious. With homeowners sitting on record levels of tappable home equity, and in an environment where inflation has lingered, household budgets remain stretched, and interest rates have made traditional borrowing less attractive, the promise of easy money tied to your home can feel especially compelling.
To the average homeowner, these offers can look like free money unlocked from their house — particularly when compared to HELOCs or cash-out refinances that come with underwriting hurdles, rate volatility, and monthly payment obligations. But a new lawsuit suggests that this “no-debt” framing may be far more misleading than many consumers realize.
The Latest Lawsuit Against Unison
Last week, the National Association of Consumer Advocates (NACA) filed suit against Unison, one of the nation’s largest home equity investment providers, alleging the company deceptively markets its product as a non-debt alternative to traditional mortgages. The lawsuit, filed in the Superior Court of the District of Columbia, seeks to halt Unison’s practices in Washington, D.C., and void existing agreements entered into by local homeowners.
At the heart of the complaint is the claim that Unison’s HEI contracts function much like high-cost loans — even though they are marketed as something entirely different. Under Unison’s model, homeowners receive an upfront cash payment secured by a lien on their property. In exchange, Unison is entitled to a share of the home’s future value when the property is sold, refinanced, or the agreement reaches maturity.
While there are no monthly payments, the repayment obligation does not disappear. Instead, it is deferred — often for years — and then resolved in one large lump sum when the homeowner sells the home or exits the agreement. In some cases, the lawsuit alleges, repayment can be triggered through foreclosure if the homeowner cannot meet the contract terms.
According to NACA, these arrangements are materially similar to mortgage products, yet allegedly bypass the licensing, disclosure requirements, and consumer protections that apply to traditional loans. The complaint argues that Unison’s HEIs should be treated as unlicensed mortgages that fail to comply with federal and local consumer protection laws.
Despite this, NACA says Unison markets its contracts as “equity sharing agreements” or “home equity investments,” emphasizing that they involve no debt, no interest, and no monthly payments. The consumer group contends that these labels frame the transaction as a simple partnership rather than what it effectively is: a lien-based financial obligation that can become extremely costly over time if home values rise or the agreement remains in place for many years.
The Risk for Older Homeowners
For older homeowners in particular, the long-term implications of these contracts can be difficult to fully grasp at the point of sale. This is where experienced reverse mortgage professionals can serve as an important consumer safeguard. Beyond simply offering reverse mortgages as a product, seasoned originators are trained to walk seniors through realistic long-term scenarios: what happens if home values surge, how repayment events affect heirs, what triggers default or foreclosure, and how different equity-access options compare over time.
Even when a reverse mortgage is not the right fit, having a knowledgeable professional explain the trade-offs between HELOCs, HEIs, and reverse mortgages can help older homeowners avoid entering into complex agreements they don’t fully understand — especially when those agreements are marketed as “no risk” or “no debt.”
“These agreements lead homeowners to believe they’re accessing their equity safely, yet they are being locked into complicated, one-sided contracts that can wipe out a lifetime of earned savings,” said William Alvarado Rivera, senior vice president of litigation at AARP Foundation. “Misleading products like Unison’s can undermine the security people need as they age.”
The lawsuit also points to how Unison’s liens are bundled into investment vehicles and sold to investors through affiliated entities — a structure critics say further distances homeowners from understanding who ultimately benefits from the appreciation in their homes.
Unison did not immediately respond to Housing Wire’s requests for comment following the filing. The company has previously defended home equity investments as innovative financial tools that give homeowners access to liquidity without monthly payments. Supporters argue HEIs can appeal to homeowners with inconsistent income, recent credit challenges, or those seeking cash without increasing monthly obligations.
Still, the case highlights a growing regulatory debate over whether home equity investments are truly a new financial category — or simply mortgages in disguise. Unison has faced similar legal scrutiny in the past, including a recent settlement in a case examining whether HEIs should be regulated like reverse mortgages.
Final Thoughts
As homeowners search for creative ways to unlock liquidity without the burden of monthly payments, home equity investments have found fertile ground. But as this lawsuit shows, the legal and consumer protection questions surrounding these products are far from settled. For older homeowners, the best defense may be having a trusted professional who can cut through the marketing and explain what “no monthly payments” really means when the bill eventually comes due. In the end, there’s no free lunch after all.
By Shannon Hicks
