That 'Debt-Free' Cash for a Share of Your House Is a Mortgage Loan. Three States Just Said So.

If you’re sitting on home equity and short on cash, somebody has probably pitched you the “debt-free” version: a lump sum today in exchange for a slice of what your house is worth later. No monthly payment. No interest, they say.

Minnesota’s attorney general just called that product a mortgage loan and settled with the company for $944,626.

On August 7, Attorney General Keith Ellison filed a settlement with Unlock Partnership Solutions, an Arizona firm that sold what it calls “home equity agreements” to Minnesota homeowners. From 2021 through 2023 it wrote about 86 of them in the state. The advances ran from $30,000 to $339,500. In exchange, Unlock took an average of roughly 33 percent of the homeowner’s equity, to be settled within ten years.

Ellison’s office alleged the deals cost 100 to 140 percent of the amount advanced, with annualized rates reaching 22 percent plus origination fees, and that Unlock never got a Minnesota mortgage lender license, skipped the required disclosures, and didn’t check whether people could repay. The company denies the allegations. It agreed to $201,050 in direct refunds, about $460,000 in debt relief, $283,576 more for restitution, and to follow Minnesota mortgage law from here on.

Minnesota isn’t alone. Colorado settled with the same company on June 24, with $283,375 in restitution identified for 125 homeowners and a promise to get licensed. Massachusetts sued a bigger name, Hometap, in Suffolk County Superior Court in February 2025, calling its product an illegal reverse mortgage. A judge refused to throw that case out in August 2025 and it’s in discovery now. Homeowners have filed their own suits against Hometap in New Jersey and Unison in California, and a housing nonprofit sued Unison in Washington, DC.

Here’s what they don’t tell you. “No monthly payment” is not the same as “no cost,” and “not a loan” is a paperwork position, not a fact about your money. The New Jersey complaint says it plainly: these contracts “can require homeowners to repay substantially more than the initial advance, producing outcomes that resemble high, compounding interest.”

The whole trick is the label. Call it an option purchase agreement instead of a mortgage and the rate caps, the licensing rules, the disclosure forms, and the counseling requirements all vanish. Your house secures it either way.

Questionable, and the tell is what happens when you ask for the number.

Before you sign one of these, get this in writing: the total dollars you’d owe to walk away at year three, year five, and year ten, run three ways, under a flat market, a 3 percent annual gain, and a 3 percent annual loss. Nine numbers. If nobody will put them on paper, you have your answer.

Then price the same cash as a HELOC or a cash-out refinance on our mortgage calculator and compare total cost, not monthly payment. Our mortgages hub walks through when tapping equity earns its keep, and the best mortgage picks are the conventional route these products are sold as an alternative to.

Maine went furthest. On April 13 the governor signed LD 1901, which treats these agreements as consumer loans, requires HUD-approved counseling and your own independent lawyer, bans prepayment penalties and mandatory arbitration, and gives you three days to back out. It reaches back to October 29, 2025, and non-compliant agreements signed after that date are void.

If you signed with Unlock in Minnesota or Colorado, watch your mail. Everywhere else, the complaint you file with your state attorney general is the thing that started all of this.

How Candid Yak makes money. Some of the products we write about pay us if you apply or sign up through our links. That never changes our verdict, our rankings, or the numbers in this article. We call a bad deal a bad deal whether it pays us or not. Some brands shown in our comparison tools are placeholder examples while we finalize partner agreements, and we label them as such.