Equity Stripping
Another Common Rescue Scheme
Photo: The Blog that Ate Miami
Equity stripping or equity skimming is a variation on lease-buyback and is one of the most common types of foreclosure rescue schemes. In it, the perpetrator assumes ownership of the house while allowing the former owner to continue living there, provided that he or she pays rent to the perpetrator, who is the new owner. The perpetrator often claims this ownership is temporary, and the victim will later reassume ownership of the home once the terms of the loan are renegotiated. But after taking over the deed to the house, the perpetrator cashes out all the equity in the home. The perpetrator also collects money from the victim by charging rent to the victim for living in the house while not owning it.
The final result is always the same: eviction from the house, with zero equity paired with greater financial loss to the victim. The perpetrator, who then has ownership of the home, will either sell the property or allow it to go into foreclosure.
As if the misbehavior of Wall Street and the Too-Big-To-Fail Bankers hasn't hurt the American middle class badly enough, we also have lots of "little guy" crooks running around trying to capitalize on people's fear, in order to get them to throw their hard-earned money at whacky ideas which will NOT really keep them in their homes.
This is a place to list such schemes as they rear their ugly heads, to help warn the public away from these fraudsters.
Generally speakiing, Mortgage Rescue Schemes are scams that target those whose home is facing potential foreclosure. The scheme prays on desperate homeowners who are struggling with, or behind in their mortgage payments. These schemes cause difference kinds of harm to the homeowners, but it usually involves the owner ultimately being forced out of their homes, and losing even more money.
The irony is, most of the people who are tempted by these scams could likely have held on to their homes if they had just consulted an attorney experienced in the defense of mortgage foreclosures.
Florida has enacted a Foreclosure Rescue Scheme statute, with tough penalties for those who prey on the fear of homeowners, and fines up to $15,000 per violation.
