Denver, CO—Public interest law firms Halperin Petersen & Mikkilineni (HPM) and Towards Justice today filed a class-action lawsuit on behalf of homeowners across Colorado against Unlock Partnership Solutions Inc. and related entities (Unlock). Unlock is an Arizona-based company that has offered so-called “Home Equity Agreements” (HEA) to hundreds of Coloradans. The complaint filed in Adams County District Court alleges that Unlock misleads Coloradans about the true nature of its high-cost HEA loan product, draining a huge percentage of home equity from hundreds of Coloradans desperate for some immediate relief from the affordability crisis. 

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“Home equity is the bedrock of financial security for millions of Coloradans and Americans across the country. People who needed credit were deceived by complicated and confusing terms used to obscure the true cost of these 'Home Equity Agreements.' This lawsuit seeks to protect Colorado families' most important investment and put an end to illegal practices that rob them of their equity,” said Eric Halperin, founding partner at HPM.  

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"For many Coloradans, their home equity is their only nest egg—their only chance at retirement, their only plan to put their kids through college, all they have to protect their family in the case of a serious illness. This case alleges that a lender came into Colorado and scammed hardworking Coloradans out of that financial security. We’re proud to represent a courageous Coloradan standing up for herself and for hundreds of others,” said David Seligman, executive director of Towards Justice.  

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Homeownership, and in particular home equity, is a key source of financial stability for millions in Colorado and across the United States. Colorado and federal mortgage lending laws are designed to protect homeowners from confusing products that can destabilize families’ finances and the broader economy. As a result of Unlock’s alleged predatory and illegal practices, hundreds of Coloradans are subject to ballooning payments, loss of home equity, and restrictions on their ability to use their homes as they see fit. When these loans begin to become due in the next few years, hundreds more Coloradans may be forced to sell their homes. Against the backdrop of the state’s well-documented housing scarcity, such practices threaten the financial wellbeing of consumers across Colorado.  

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The lawsuit alleges that Unlock preyed upon Coloradans by offering its HEA product through an opaque, nearly 100-page contract filled with confusing terms of art that obscure the true cost of the loan, among other unfavorable terms. In an apparent effort to take advantage of consumers and attempt to evade federal and state laws that apply to mortgage lending, Unlock also asserts that its HEA product is not a loan. But Unlock provides homeowners with an advance of money, receives security through a mortgage on their home, and then requires repayment within at least 10 years. Despite Unlock’s efforts to disguise it, the product it offers is a residential mortgage loan. 

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Unlock provides homeowners with what it calls an “Investment Payment”—in effect, the principal of the loan—based on a percentage of the home’s current value. In exchange for the Investment Payment, Unlock’s contract entitles it to a payoff of double the percentage used to calculate the payment to the homeowner. In other words, if the homeowner receives 10% of the home’s current value, Unlock is entitled to 20% of the home’s value at the end of the HEA term, all but guaranteeing Unlock a massive return regardless of any changes in the housing market. In fact, it would likely take a catastrophic market crash more than five times more severe than the worst crash in modern history for Unlock to be at risk of not being fully repaid.  

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The high cost of Unlock’s HEAs is not to compensate the company for higher risk. Unlock has structured its HEA product with highly lopsided terms so that it effectively shifts almost every potential downside risk and cost to consumers to ensure the future payment it receives far exceeds its advance. Unlock then bundles these loans and sells mortgage-backed securities to Wall Street investors.

 

Plaintiff Sheila Johnsen lives in Commerce City, Colorado, with her husband, Adam. Sheila found Unlock in 2023 while searching online for options to help with debt incurred due to Adam’s serious car accident in 2022. After several phone calls and a visit from a home appraiser, Sheila was provided with a lengthy package of documents to review and sign, without further explanation from an Unlock representative. Unlock charged Sheila origination, appraisal, settlement cost, and recording fees for a loan of $65,400, which represented approximately 12.58 percent of her 2023 home value. However, under the terms of the agreement, at the end of the 10-year Unlock agreement, or when Sheila sells her home, Unlock will receive 25.78% of the Johnsen’s home value. This means Sheila will owe Unlock more than twice the percentage of the home value that she received from the loan, capped only by a compounding interest rate of more than 19.9%, which is far above market mortgage rates and the Colorado usury cap for unsupervised loans.   

 

The lawsuit alleges that Unlock has violated numerous state and federal consumer protection laws, including the Colorado Uniform Consumer Credit Code, Colorado laws concerning traditional and reverse mortgages, the Colorado Consumer Protection Act, the Truth in Lending Act, and the Colorado Consumer Equity Protection Act. 

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The lawsuit seeks a jury trial and relief for members of the class, including declaring void, terminating, voiding, rescinding, and/or reformulating Unlock’s Home Equity Agreements, and awarding the plaintiff and class members damages as provided by law. 

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Click here to view the complaint in the case, Johnsen v. Unlock Partnership Solutions, Inc. et al. 

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For more information or to schedule an interview, contact press@hpmjustice.com or press@towardsjustice.org.  

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Halperin Petersen & Mikkilineni (HPM) is a litigation firm built by former CFPB Enforcement leaders to hold the powerful accountable for exploiting workers, consumers, and small businesses. HPM brings cutting-edge legal firepower to strategic litigation against predatory corporate practices and abuses of power that burden people with debt. 

 

Towards Justice is a Colorado-based national non-profit legal organization, which represents working families through litigation and public policy advocacy to take on corporate abuse and corruption.