ST. PAUL, Minn. (FOX 9) - Minnesota’s attorney general has reached a major settlement with an Arizona finance company accused of targeting homeowners with unlawful mortgage loans.
Attorney General alleges illegal lending to vulnerable homeowners
What we know:
Attorney General Keith Ellison said Unlock Partnership Solutions, Inc. offered "home equity agreements" to Minnesota homeowners, advancing lump sums in exchange for a large share of their home equity, to be paid back within 10 years.
Ellison alleged these agreements were actually high-cost mortgage loans that violated Minnesota’s laws on interest rates, disclosures, and licensing. Unlock was not licensed to offer these types of loans in Minnesota.
Unlock began lending in Minnesota in 2021, entering into about 86 agreements with advances ranging from $30,000 to $339,500. The company typically claimed around 33% of a homeowner’s equity in exchange for the advance.
Ellison’s office said Unlock targeted homeowners facing financial hardship—precisely the people Minnesota’s mortgage laws are meant to protect.
The backstory:
The investigation found Unlock’s fees and equity stakes amounted to extremely expensive and illegal interest, sometimes costing homeowners 100% to 140% of the loan amount. Unlock also allegedly misrepresented the loans as not creating debt or charging interest, even though annualized interest could reach 22% plus large origination fees.
Ellison said Unlock failed to verify whether homeowners could repay, a requirement added after the 2008 foreclosure crisis to prevent risky lending that can lead to people losing their homes.
Settlement terms and relief for affected Minnesotans
Why you should care:
The settlement means Unlock will provide $944,626 in relief to Minnesotans, including $201,050 in direct refunds, an estimated $460,000 in debt relief, and $283,576 for additional restitution managed by the attorney general’s office.
Unlock agreed to stop offering these agreements unless it becomes licensed in Minnesota and follows all state mortgage laws, including rate caps and consumer protections.
"Homeownership is a primary means for Minnesotans to obtain financial stability and secure a place to live and raise a family," said Ellison. "That’s why my team and I work so hard to enforce laws against abusive lending practices that threaten Minnesotans’ equity and housing stability. I’m glad that Unlock has agreed to resolve the matter, abide by Minnesota law, and pay nearly $1 million that will be used to compensate Minnesota consumers who were harmed by these violations."
Unlock denies the allegations but has agreed to the settlement terms and to comply with Minnesota law in the future.
The Source: Information from the Minnesota Attorney General’s Office.