Equity stripping – the process of reducing the equity value of a real estate asset – is one of the oldest asset-protection strategies. Essentially, it entails encumbering a property with debt to such an extent that there is little or no equity for creditors to acquire.
Two warning signs of equity skimming are as follows: The prospective buyer agrees to buy the home right away and without giving the property a thorough look; and. The prospective buyer does not put any money down but rather, hands you a piece of paper that, in so many words, says, “I.O.U.”
The Florida Legislature has provided that equity skimming is a third degree felony. A person convicted of a third degree felony may be subject to imprisonment of up to five (5) years and a $5,000 fine. A habitual offender may be sentenced to up to ten (10) years imprisonment.
Under section 697.08, F.S., equity skimming is defined as “purchasing, within a 3-year period, two or more single-family dwellings, two-family dwellings, three-family dwellings or four-family dwellings (or a combination of those) that are subject to a loan that is in default at the time of purchase or within 1 year ...
Equity Skimming is a Mortgage Fraud committed by skimming the equity from a property as part of subprime lending refinancing. This fraud occurs when a homeowner who is in default on their real estate taxes or mortgage is offered a loan to prevent immediate foreclosure.
Equity skimming is a type of real estate fraud scheme that became popular in the early 2000s following the mortgage crisis. It basically involves a person or investor gaining title to another person's home, then refinancing the home and taking out all the equity in the property.
A silent second mortgage is a second mortgage placed on an asset (such as a home) for down payment funds that are not disclosed to the original lender on the first mortgage. The second mortgage is called "silent" because the borrower does not disclose its existence to the original mortgage lender.
A second mortgage is an additional mortgage on one piece of property. It is considered “silent” if that second mortgage or loan is used to secure down payment funds and then not disclosed to the original mortgage lender prior to closing.
Chunking. Chunking is a variation on property flipping that often starts as a seminar or program where the scam artist pitches real estate investments to an investor or group of investors.
How It Works: "Flopping" occurs when a short sale is approved based on a misrepresentation of the value of the property. In a typical flopping fraud, the fraudster is the buyer purchasing the property from the short sale seller. In some cases of flopping, the seller's real estate agent is the buyer.
A non-arm's length transaction occurs when the buyer and seller have a personal relationship. A deal between friends, family or co-workers is considered to be a non-arm's length transaction. With these home sales, self-interest may not be the motivation, for instance, when parents sell their home to an adult child.
Before a mortgage is filed on the property, it must be signed by a representative from the lender and the borrowers. There is also a place for someone to sign as a witness to the transaction. Anyone whose name is on the deed must sign the mortgage. Your spouse must sign even if they are not on the mortgage.
As a predatory lending mechanism, equity stripping is exercised against homeowners facing foreclosure. An investor buys the property from the homeowner under threat of foreclosure and agrees to lease the property back to the former owner, who may then continue to use the property as a residence.
Someone who lacks a credit history with one of the nationwide credit reporting companies is considered "credit invisible" or a credit ghost.
With respect to mortgage fraud, straw buyers are loan applicants used by the unscrupulous to obtain mortgages, with the deliberate intent to disguise the true buyer's identity or the true nature of the transaction.
A “piggyback” second mortgage is a home equity loan or home equity line of credit (HELOC) that is made at the same time as your main mortgage. Its purpose is to allow borrowers with low down payment savings to borrow additional money in order to qualify for a main mortgage without paying for private mortgage insurance.
An air loan is a type of mortgage fraud that seeks to profit from unsuspecting lenders. A mortgage broker invents both a property and a borrower in order to earn false profits on completed loan transactions.
An inflated loan appraisal determines an asking price that is much higher than the market value of the home. An over-inflated appraisal is a type of mortgage fraud that could cause a buyer to pay much more for a home than they should.
Since you already have one mortgage, expect the underwriting process to be even tougher when you're trying to get a second mortgage. Lenders may ask for larger down payments and charge higher interest rates. Here's a look at how underwriting is different for a second mortgage: Credit score.
If convicted of this offense as a felony, you face 16 months, or two or three years in the California state prison and a maximum $10,000 fine. If convicted of this offense as a misdemeanor, you face the same fine and a maximum one year in a county jail.
Skimming is a type of white-collar crime that involves a person taking value off of the top of a certain transaction. To skim is to take “a little off of the top.” When this is done on large transactions or on a lot of small transactions, the amount of money involved can result in misdemeanor or felony charges.
Loan flipping occurs when a lender encourages a borrower to refinance a loan, which generates fees for the lender, but doesn't actually help the borrower.