Equity skimming is a form of real estate fraud whereby an unscrupulous investor or person obtains title to someone's home, and refinances that home to steal the property's equity. It typically occurs when a homeowner is in financial distress, is unable to make mortgage payments, and is facing 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.
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 Stripping is a set of strategies designed to reduce overall equity in a property. Equity stripping strategies can be used by debtors as means of making properties unattractive to creditors, as well as by predatory lenders looking to take advantage of homeowners facing foreclosure.
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.”
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 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.
In the past decade, private equity sponsors have taken a more aggressive stance against creditors of their portfolio companies, the most recent iteration of which has come in the form of collateral stripping. Sponsors have been using creative lawyering to transfer valuable collateral out of the reach of creditors.
You may cancel the HELOC for any reason. To cancel, you must inform the lender in writing within the three-day period. Then the lender must cancel its security interest in your home and must also return fees you paid to open the plan.
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.
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.
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.
Definition: The term puffing refers to “extravagant claims made by sellers in order to attract buyers.” In plain terms, puffing is an exaggeration of a fact. Many people including real estate agents are guilty of puffing.
Simply put, predatory lending becomes a crime in California when the lender manages the loan transaction to extract the maximum value for itself without regard for the borrower's ability to repay the loan.
Fair lending prohibits lenders from considering your race, color, national origin, religion, sex, familial status, or disability when applying for residential mortgage loans.
Packing. You receive a loan that contains charges for services you did not request or need. "Packing" most often involves making the borrower believe that credit insurance must be purchased and financed into the loan in order to qualify. Hidden Balloon Payments.
Is home equity an asset. Home equity is considered one of the most valuable assets a homeowner can have. This is because home equity can increase over time, and homeowners may use it to access funds in the form of a loan.
Savvy thieves are able to forge documents, commit fraud, and steal the title/deed to your home, potentially to sell the property to someone else and reap the proceeds, or use their fraudulent ownership to access a lending tool and extract the home's equity.
What is a good amount of equity in a house? It's advisable to keep at least 20% of your equity in your home, as this is a requirement to access a range of refinancing options. 7 Borrowers generally must have at least 20% equity in their homes to be eligible for a cash-out refinance or loan, for example.
You gain equity primarily from paying down the principal balance of the home loan through your monthly mortgage payments, or by an increase in your home's market value.
Someone who lacks a credit history with one of the nationwide credit reporting companies is considered "credit invisible" or a credit ghost.
What Is a Straw Buyer? A straw buyer, or straw purchaser, is a person who purchases on behalf of another person. A straw buyer is used when the real buyer cannot complete the transaction for some reason.
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.
Double selling is a type of real estate or mortgage fraud that generally involves a mortgage broker. The mortgage broker takes the information from a potential borrower in order to obtain a mortgage loan. The borrower is usually in on the mortgage fraud scam.