Schemes: Equity Stripping

Equity Stripping

Another Common Rescue Scheme

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.

Scheme: Lease-Buyback

Lease-Buyback Schemes
A Classic and Widespread Scheme

A lease-buyback scheme starts with an offer where the owner can turn the lease over to another, with an option to buy it back later. The owner is promised to be able to rent the property back, which will be counted toward an eventual buyback. These will almost certainly end in the loss of the property, or considerable additional cost – The rental prices maybe made so high that the original owner cannot afford to continue paying and/or the buyback price maybe set far above the fair market value of the property.


We have seen many examples of this scheme around Florida. Thanks to the tough Florida law, the perteptrators (at least so far) have always agreed to sign a deed immediately returning title to the homeowner, in order to avoid being reported to the States Attorney. That does not mean that the simple act of signing the deed to the scammer in the first place doesn’t complicate the task of helping the homeower.

Please, PLEASE, contact a licensed real estate attorney before deeding your home to anyone (including the BANK)! You have rights, and your chances of retaining your home (if you simply defend) are much better than you may imagine.

Video: A Moment for Humor

We’re Suckers for a Cute Dog!

We spend a lot of time thinking about such heavy, complicated subjects as mortgage securitization, credit-default swaps, and advanced strategies for keeping people in their homes.  Once in a while, though, you just need to relax and enjoy a little simple humor.  In that spirit, meet Clark!