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What is Equity Skimming?

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

What is Equity Skimming?  The quick simple answer is that it is a scam to cheat homeowners who are having problems making their mortgage payments out of the equity in their property.

Here is how the scam works.  The homeowner is contacted by the Scammer offering to payoff their mortgage, or to give the homeowner a sum of money when the Scammer sells off the property.

The Scammer will most likely ask the homeowner to move out of the house quickly, and deed the house to them so that they can sell the house for them.  The Scammer then proceeds to rent the property while trying to sell it, but does not use the money to make the mortgage payments, which results in the Lender foreclosing on the homeowner if the property does not sell.

Deeding the property over to someone else does not eliminate the homeowners obligation to pay the mortgage.  Deeding the property to the Scammer gives the Scammer ownership of the property without any of the finacial obligation.  The financial obligation remains with the homeowner, as well as all the negative results of being foreclosed on.

The Scammer profits all of the rental income that they are able to acquire before the property is foreclosed, or all of the profit from the sale of the property if they are able to sell it.  The homeowner loses any income produced by the property because they no longer have any ownership in the property.  Also because they Deeded to property to the Scammer of their own free will, they do not have any legal action that they can take.

Scammers feed off of those who are in trouble, because that is when they are most vulnerable.  Most homeowners who are in danger of losing their home will do almost anything to try to keep it, which makes them prime targets for Equity Skimming. 

What Is Equity Skimming?  It is stealing from the trusting and helpless.  Be careful who you trust, and be careful what you agree to sign.

 

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 Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Posted by

George Souto
NMLS# 65149

C (860) 573-1308
CALL 7 Days/Wk
Fax (860) 760-6891

Email Me
About Me
My Blog

I am a Mortgage Loan Officer who can assist you with all your mortgage & refinancing needs in
CT, and RI

I can assist you with your Conventional,
FHA, CHFA, VA, USDA, & 203K loan programs.

I reside in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Haddam. E. Haddam, Higganum, Chester, Essex, Deep River.

 

Comments(36)

Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

George, we had a few unethical Realtors/agents doing some of this and have since been run out of town and had their licenses revoked.

Apr 03, 2013 09:35 AM
Ruth Lerner
William Raveis Real Estate - Brookline, MA

Goodness, I never heard of this so thank you for the information.  What a horrible thing, who comes up with this crap?  

Apr 03, 2013 09:42 AM
Joni Bailey
101 Main St. Realty - Huntsville, TX
Your Huntsville / Lake Livingston Area REALTOR®

You have got to be one of the most re-blogged members on ActiveRain. You always provide such great information. THANK YOU!!

Apr 03, 2013 09:56 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Bill in the end it does come down to the homeowner no matter how many warnings, or safety nets are put in place

Pat and Steve Scammers find the weakness and then exploit it, these homeowners just happen to be a category of people that the weakness is easy to identify and easier than most to exploit.

Pamela, you would think that most people would know not to do that without seeking legal council to make sure that this is on the up and up.  but this seems to be what happens when people get desperate.

Paula, yep but I thought he wore horns :)

Maureen and it is the desperation that makes them vulnerable

Scott, it is nothing new, and it seems to be a scam that there does not appear to be an end to.

Joan, those pulling off this type come for all parts of this industry.  Glad to hear that those around got caught.

Ruth if there is a way to scam someone, there is someone trying to do it.  That is why homeowners that are in trouble really checkout what is being offered to them.

Joni I am always happy to provide material for others :)

 

Apr 03, 2013 10:25 AM
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

George it makes me sick to think that the most vulnerable are treated that way.

Apr 03, 2013 12:35 PM
Nick T Pappas
Assoc. Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, Broker/Providence Property Mgmnt, LLC Huntsville AL - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource
George, those scammers will never stop because there will always be someone who will fall for it.
Apr 03, 2013 01:01 PM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Even if it's their free will when they deeded their property, it was done under false pretenses and I think the Attorney General in the state where the scamee lives would be appropriate.  Scamming is a crime, no?!?

Apr 03, 2013 01:04 PM
Kathy Streib
Cypress, TX
Home Stager/Redesign

George- it's important to get this information out there so innocent people will not be taken advantage of. 

Apr 03, 2013 01:30 PM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Yeah these people are scum. To prey on those already in a world of hurt they should get the maximum penalty for the crimes they commit.

Apr 03, 2013 02:15 PM
Eric Crane -- Your Full Service, Discount Fee Realtor®
DPR Realty LLC - Gilbert, AZ
Greater Metro Phoenix Arizona

Hi, George -- thanks for the heads up on this scam.  amazing the lengths people will go to take advantage of someone -- especially those who are already down on their luck.  have a blessed day -- Eric

Apr 03, 2013 02:17 PM
Sherry Chastain
Hendersonville, Nashville, Old Hickory, Lebanon Tennessee - Hendersonville, TN
Realtor, Selling Homes, Lake Properties,Luxury Homes,Short Sales

Terrible that someone would be evil enough to come up with this scam. I hope they can put a stop to these people eventually and prosecute. 

Apr 03, 2013 02:20 PM
Chuck Mixon
The Keyes Company - Cutler Bay, FL
Cutler Bay Specialist, GRI, CDPE, BPOR

Oh another new scam, just what the markets need right now. Here in South Florida the Tenants can't provide names or contact information to the judges when as for during the eviction process. The only thing the I thing will clear this mess up is to clear up the inventory, too many vacant home and too easy to squat.

Apr 03, 2013 02:33 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

George - It's unfortunate that people fall into these traps and sign over their properties.

Apr 03, 2013 03:08 PM
Praful Thakkar
LAER Realty Partners - Burlington, MA
Metro Boston Homes For Sale

George, this is even worse than Craigslist scam - and I wonder why people fall for it! We all know (and say) that if it is too good to be true....

Apr 03, 2013 04:21 PM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Geroge, there are so many predators just waiting to find a quick buck and don't care who they hurt in the process

Apr 03, 2013 10:57 PM
Ridhi Raheja
Movement Mortgage (Illinois) - Naperville, IL
FHA, 203k, VA, Jumbo, PreApproval, Jumbo Home Loan

Informative post, George. This post serves as a reminder to all of us to be very vigilant all the time.

Apr 04, 2013 03:08 AM
Al & Peggy Cunningham, Brokers
RE/MAX West Realty Inc., Brokerage - Brampton, ON
Our Family Wants To Help Your Family!

George this was so worthy of a feature! It is so hard to believe there are people out there doing this and that there are people who would fall for it. But if someone is in trouble they are looking for help and to think someone would do this is unconscionable.

Apr 04, 2013 03:12 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Jennifer I feel the the same way

Nick unfortunately you are right.

Carla, they can give it a try, but it is difficult to prove.  The best thing is to just not put yourself in that position in the first place.  I know if someone was to ask me to sign over my house to them the red flags would be going off all over the place.

Kathy you are absolutely right

David I am completely on board with that.

Eric, I wonder how they are able to live with themselves

Sherry this scam has been around for a long time, and there does not seem to be an end in sight.

Chuck a turn around in the market would help, but there will always be homeowners in trouble, which makes them easy prey for Scammers.

Christine you would think that the bells would go off, but they always have someone that will fall for it.

 

Apr 04, 2013 07:45 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Praful, yes everyone knows that saying, but people always seem to think that it applies to the other guy, but it applies to everyone.

Ed that is very true, and they always have someone that will fall for their scams

Ridhi, that is so true, we always have to be on our toes

Al and Peggy I agree, and they just keep on moving from one victim to another.

Apr 04, 2013 07:50 AM
Mike Young
203kOnLine.com, covering the USA - Stallings, NC
FHA 203k Consultant 916-758-1809

Sounds terrible. I actually had a person find another Mike Young and take them to a title company where the other Mike Young signed off a second note I was carrying for the borrower and when my payments stopped coming in I found out what had happened. There are all kinds of crooks out there.

Apr 06, 2013 03:31 AM