Many baby boomers have considerable equity built into their homes. An acquaintance called me last week, very embarrassed, but looking for somewhere to get answers. A single woman with 20 years into her home, she was a perfect target for the low life form of human being called the Equity Stripper. Her call was too late, but I have hopefully given her the resources she can use to report her experience, and possibly recover some of her losses.
Frequently, people who have hit hard times for any of a multitude of reasons, are embarrassed to ask for help. We call it burying your head in the sand. They look outside of their sphere of friends and advisors for help in settling their financial problems, hoping to remain anonymous. Please, IF IT SOUND TO GOOD TO BE TRUE, IT IS.
Boomers are perfect targets. Many, such as my friend, have not bought or sold their primary residence in many years. When a job lay off, medical situation, or just plain hard luck hit, the first place they look is to their home for the cash to make it through. In her case, getting behind in payments, an unscrupulous company scanning for pre-foreclosure properties found her, approached her, wooe'd her and won her house.
The company (now under investigation by the Minnesota Department of Commerce) promised to buy her home, pay her late payments, and sell it back to her on a CD until she could get back on her feet. What did they get? All of the equity built in between her current mortgage, and the new value they put on the home today, plus a home occupied by the person who loved it, making the payment at the higher rate. At 18 months that initial rate balloons, the owner cannot make it, and voila, the stripper not only got cash out, but gets the house back when she can't make the new payment.
The Minnesota Attorney Generals Office has a great site on Equity Stripping. The information included on the site are ways to spot a scammer, and a couple of alternatives for people faced with foreclosure. If you or someone you know is faced with foreclosure, talk to someone you trust. Many local realtors, mortgage loan officers and credit union professionals can help. A couple of non-profit agencies can help direct you:
Home Ownership Center http://www.hocmn.org/ 866-462-6466
HUD Housing Counseling www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
800-569-4287
Minnesota Housing Finance Agency
800-657-3769
If you think you have been a victim of equity stripping, you can contact the Attorney Generals Office at 1-800-657-3787
TTY 1-800-366-4812 http://www.ag.state.mn.us/
You can also contact the Minnesota Department of Commerce at 1-800-657-3602 http://www.commerce.state.mn.us/
We contacted the Attorney Generals Office, found out that the company is already being investigated and are waiting further instructions. We were also able to contact an amazing group of attorneys and law students willing to help at
http://www. volunteerlawyersnetwork.org/volunteer/full/realestate
If someone you know tells you about some angel who will be helping them out of a tight spot, let them know about equity stripping. There is a place for this type of angel, but it is not in heaven!
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