The New York Times recently published an article on a new scam being perpetrated upon homeowners in financial distress. The scam takes various forms, but the promises by the scam artists are the same - they may provide distressed homeowners cash upfront, free monthly rent, and/or a chance to retain their homes in the long run. In all cases, the homeowners sign a deed to their home to the scam artists, who then borrow as much money as possible against the equity in the home and pocket the money. This scheme is known as "equity stripping".
Some of the companies that have employed the "equity stripping" technique are Home Savers, Equitable Real Estate Solutions, and RYM Technology Holdings. Each of the examples of "equity stripping" described by the New York Times involved homeowners facing foreclosure. The "equity stripper" advertised heavily about the homeowners ability to retain their home if they signed their homes over to the company and then make mortgage payments for a year, repairing the homeowners' credit. Unfortunately, in each instance, the company took out additional loans based upon the equity in the home, and then permitted the mortgages to be foreclosed, walking away with the equity in the home.
The homeowners described in the article were fortunate enough to contact various Legal Services Agencies which filed lawsuits against the companies to attempt to recover the lost money. Depending upon how far into the foreclosure the homeowners find themselves, they may be able to recover their property or their money, assuming the "equity stripper" has assets or can even be found. My office is investigating and prosecuting lawsuits against companies engaged in predatory lending and equity stealing schemes. If you think you are a victim of one of those schemes, contact my office for an evaluation of your claim.