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.