Residents of Washington may want to learn more about equity skimming, what it is and how the law sees it. The fact is that equity skimming is a type of real estate fraud and is a crime. You should know what it means and how it could affect you and your finances.
According to law sources and the legal code, involved is a home that is in danger of foreclosure. The homeowner receives an offer of a loan to prevent immediate foreclosure, and equity skimming happens. The mortgage company’s foreclose then proceeds.
The distressed property
This is a home in danger of foreclosure. It may be for non-payment of taxes or for default of the payment of the mortgage.
The distressed home consultant
This consultant contacts the homeowner in writing or email. They will claim to stop or delay or postpone a foreclosure sale.
The act of equity skimming
The home’s title receives a transfer in this refinancing scheme. The lender receives income from the property, such as rental payments, which go to their personal use, instead of payment towards the mortgage.
The lender may then remove items from the home
The scam involves the removal of appliances, fixtures and furnishings by the new lender. Furnishings and appliances are not replaced with others of similar value.
This lender might help the distressed homeowner become a renter
The scheme may involve the distressed homeowner becoming a renter in their home. However, the law does allow being a renter for a period of no more than 20 days after closing; otherwise, it falls under equity skimming. However, an allowed exception may be that the distressed homeowner needs to find a new place to live.
The foreclosed homeowner may want to know more about real estate and landlord/tenant law to be sure that, even though a renter, they are not committing a crime or a case of fraud. Equity skimming is against the law.
Equity skimming on a distressed property is a crime. The fact is that this fraud may not help the distressed homeowner, whose home is in foreclosure.