Local Mortgage Information for Your Area
What are Foreclosure Scams and Equity Skimming?
Predictably, borrowers that are facing
foreclosure and bankruptcy are often eager to find ways to keep their home, making them prime targets for predatory foreclosure scams that seem too good to be true (which is usually what they are).
One of the most common foreclosure scams is
equity skimming.
There are two variations of equity skimming, both of which not only result in the borrower losing their home, but much of their cash, too.
In both situations, the perpetrator convinces the borrower to sign over the house's deed (which should not be, but often is confused with the
mortgage), with the belief that the perpetrator has a legitimate plan to straighten out things.
One of two things happens next: Either the borrower stays in the house, paying rent to the perpetrator, or the borrower moves out, and the perpetrator rents the house to another party.
In either scenario, the perpetrator collects rent, but doesn't pay the mortgage (as originally promised). The result: the mortgage defaults, the house goes into foreclosure, and the perpetrator skips off with the cash.
This description is laid out as a public service and in no way do we condone this behavior.