The Carlyle Group and new affiliate Unison want to be on both the debt and equity side of your home. FT reported:
The company will buy as much as a 15 per cent interest in homes, spending between $30,000 and $500,000 per home. The homeowner will pay for an appraisal and Unison will invest at a 5 per cent discount to that appraised value. There is also a 3.9 per cent transaction fee.
At the end of the 10-year loan, Unison would, however, get its 1.5x appreciation share as well as the capitalized sum total of the 1.8 per cent initial cash interest rate savings (that’s the 7 per cent minus 5.2 per cent).
Unison said its typical customer has a Fico score over 700 and that typical use of proceeds are home improvements or paying down credit card debt.
Credit card debt raises red flags and calls into question someone being able to pay off a large loan, plus an outsized amount of the home's appreciation, plus making up for the interest rate break given on the loan.
I expect a large number of Unison clients not being able to keep their home after the 10 year loan comes due.
What happens when unsatisfied borrowers go to regulators and complain about Carlyle's Unison? They might get, "Which Unison?" Home equity Unison follows government procurement contractor Unison in the Carlyle family tree.
Carlyle held government procurement contractor Unison from 2005 to 2010, then repurchased the firm in June 2020. After a two year hold Carlyle flipped its majority stake to Madison Dearborn Partners but retained a minority investment (which it still holds).
Carlyle just wants their share of well, everything. It's the PEU way. Don't give it to them.
Home equity Unison's CEO Thomas Sponholtz said "We are trying to democratize the rich relative." Carlyle's billionaire co-founders qualify as rich relatives.
Sponholtz' worked for Bear Stearns, where he and the company were sued for negligence and negligent misrepresentation. The parties settled for $130,000." That was a long time ago in a world that no longer exists.
Unfortunately, our current world has far more conflicted entanglements. Sponholtz and Carlyle want you to bite on their sales pitch. Read all the fine print before you sign, every blanking word.
