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Unlock settles with Minnesota AG over home equity agreements
The settlement requires $944,626 in monetary and debt relief, and the company will only be able to return to Minnesota after meeting licensing and compliance conditions.
HousingWire reports that Unlock has reached a settlement with Minnesota Attorney General Keith Ellison resolving claims that its home equity agreements were effectively mortgage loans subject to state usury caps and licensing rules.
As part of the deal, Unlock, which denies wrongdoing and says it entered the settlement to avoid litigation, will provide $944,626 in monetary and debt relief. The company also is no longer offering its home equity agreement product in Minnesota while it meets conditions tied to licensing and compliance before it can reenter the state.
The AG’s office said its investigation found Unlock entered about 86 home equity agreements in Minnesota between 2021 and 2023, with advances ranging from $30,000 to $339,500 and an average equity stake of roughly 33% per property. The office alleged the product’s economics could amount to an extremely costly and illegal form of interest, and it also said Unlock did not verify borrowers’ ability to repay without refinancing or foreclosure.
Minnesota tightened its Mortgage Originator and Servicer Licensing Act after the 2008 foreclosure crisis to require ability-to-repay assessments and to curb equity-based lending practices that the state says can strip homeowner wealth. HousingWire reports that a Unlock spokesperson did not immediately respond to a request for comment.