Are You A Victim Of Equity Skimming?
There are many types of mortgage or loan scams, but equity skimming is one of the most brutal and it is illegal. Many times, however, the perpetrators are never caught. Unfortunately for the victims, it can be very costly and usually ends up with depleted home equity accounts and sometimes even results in losing the house to the lender.
This is in contrast to fair and reasonable investing practices that allow homeowners to sell their homes to investors who then “flip” the home to another buyer and take the equity as their profit. This procedure is typically used when a homeowner is headed toward foreclosure and there is no other way out. The option is to lose the house and the equity to the lender while ruining one’s credit, filing for bankruptcy and still running the risk of losing the home later down the road if one’s financial situation does not improve, or losing only the equity because the homeowner has to sell for less than the value of the home. A homeowner in the right frame of mind would conclude that losing the equity is the lesser of all evils because it allows that homeowner to get back on his feet and possibly purchase another home when he does.
Equity skimming, on the other hand, does not end so happily. One version of this scam has the lender offering to refinance the home for homeowner and taking a piece of the equity for closing fees. The homeowner’s perception is that he has received more favorable loan terms, but he has paid for those terms in loss of real value. A few month’s later the homeowner finds himself in trouble again and the lender offers another refinancing option, paying for the closing costs with equity money - again. Two or three rounds of this ends up with the homeowner out of his equity and the lender forecloses on the property anyway because the homeowner’s financial situation has not changed. Now, the homeowner has no home, no equity, and bad credit.
If you feel that you are a victim of equity skimming then you could have a right to rescind your transaction with your mortgage company and receive damages. You could get your equity back! But before you can seek a remedy for your situation, you should seek legal counsel and request a loan audit from a professional loan auditor.
This information should not be construed as legal advice. It is FOR INFORMATIONAL PURPOSES only.