Unison said its equity agreement contracts have produced 16.3% annualized net returns since 2010. US home prices across 20 metro regions grew 18.8% in November from a year-ago, according to S&P, Corelogic and Case-Shiller. This sleek, simple coat tree collects your outerwear. They share in the rise of home prices with homeowners, but are also exposed to losses in case prices drop. Turns out, you dont have to branch out too far to make a big statement. The major appeal of Unison's real estate agreements or Point's home equity investments for homeowners, unlike traditional home equity loans, is that they do not increase the indebtedness and monthly mortgage payments of the homeowners.įor investors, they gain exposure to home values instead of funding the debt. Homeowners in aggregate are sitting on US$24trn of home equity and cash-flush investors are willing to help them tap into that wealth, market participants said. The accelerated increases in home prices due to blistering demand and relatively tight supply since the pandemic will likely support growth in this fledging part of the housing finance industry. The Point-Redwood deal represented the first-ever securitization of these home equity contracts, which emerged as a new type of collateral that has grown out of the current housing boom. The structure is similar to the US$146m issue, Point Securitization Trust 2021-1, from Point and real estate finance firm Redwood Trust which landed last September. The Unison deal attracted solid buying interests from asset managers and credit funds, O'Hara said. The deal, on which Nomura and Barclays were joint bookrunners, is callable in 36 months. There was an equity portion that was not offered. It offered two unrated tranches: a US$310m senior note that carried a weighted-average life of 2.29 years and a 4.5% coupon and a US$22m mezzanine class with a 3.01-year WAL and a 6.5% coupon. The San Francisco-based firm, which currently manages US$1.3bn in residential equity agreements, in December priced its inaugural US$443m deal, Unison Trust 2021-1. 'We are in the process of working with two rating agencies to try to develop a rating methodology for future securitizations,' O'Hara said.

The company is also preparing a possible rated transaction later this year. 'We have plans for three securitizations in 2022,' said Matthew O'Hara, Unison's head of portfolio management and research, adding the next deal is expected to arrive in the first quarter.

The securitization of these contracts, where Unison gives cash to homeowners in exchange for a share of their homes so it can profit from their price appreciation, opens up another avenue of financing for Unison and rivals such as Point in addition to warehouse lines and investments from institutional investors. Fintech firm Unison hopes to issue up to three home equity agreement securitizations in 2022 after this type of residential asset made its debut last year.

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