Appeals court rules HEIs are reverse mortgages

"The Ninth Circuit's order just reflects the fact that the parties settled the case. The Ninth Circuit's prior opinion, which explained that Unison's product is a hidden reverse mortgage and that Unison deceives homeowners, remains on the books, Scott-Railton said. That decision joined a clear and growing consensus from courts across the country: Recent decisions in Colorado, New York, and Massachusetts all confirm that these hidden reverse mortgage products cannot escape laws protecting homeowners."

"The settlement, announced last week, came on the heels of an opinion issued by the Ninth Circuit Court of Appeals. The three-judge panel ruled in August that Unison's HEI product amounted to a reverse mortgage, reversing an October 2023 ruling in favor of Unison from the U.S. District Court for the Western District of Washington. On Oct. 17, the appeals court panel granted the parties' request to dismiss the case after Unison initially sought a rehearing."

"Unison is facing similar accusations in Colorado. Plaintiff Deborah Dee Stone accused the company of unfair and deceptive acts and practices, and violations of reverse mortgage lending laws, among other allegations. In late July, a bankruptcy court judge left most of the plaintiff's claims for relief in place. The court found that Ms. Stone adequately alleged facts that the product was a loan that had to be repaid, rejecting Defendants' argument that it was an option contract."

The Ninth Circuit Court of Appeals ruled in August that Unison's HEI product amounted to a reverse mortgage, reversing a prior district court ruling. The parties later settled and the appeals court granted a dismissal request after Unison sought a rehearing, while the Ninth Circuit opinion remains on the record. Courts in Colorado, New York, and Massachusetts have similarly found such products subject to homeowner-protection laws. Unison faces separate litigation in Colorado where a bankruptcy judge left most claims intact and found allegations that the product was a repayable loan sufficient. A New York case recommended partial summary judgment for Unison but opposed full dismissal.

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