Homeowners in mortgage trouble need beware “equity stripping,” a scam where someone else takes over your deed, borrows as much as they can against the house, pockets the cash, and runs, leaving you to probably still lose your house.

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  1. AcidReign says:

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    &nbsp &nbsp Well, yeah, that’s a scam, pure and simple. Still, there are “legal” things, that actual banks do, to get you separated from your title. Folks, never give up your title. Not for your car, and definitely not for your house. Never. No way, no how!

    &nbsp &nbsp The current vogue way for a bank to get control of a house for cheap, is to issue a “reverse mortgage.” These pitches are typically offered to elderly homeowners, who’ve paid off their debt, and own the property outright.

    &nbsp &nbsp Still, imagine said homeowner, who has total possession of their house. Still, they have to pay taxes, and insurance. Maybe they were counting on a pension, and the pension-delivering company defaulted. These homeowners, who are now depending entirely on Social Security, are short of operating funds. They are too old to work, have tax and insurance payments, and are paying for a crap-load of drugs to keep them alive.

    &nbsp &nbsp Along comes the bank. Hey guys, we’ll pay you $500 (or $1000, or whatever is favorable for the bank to close the deal) a month for the REST OF YOUR LIFE! All you have to do is sign over the deed to your house. Interesting deal, eh?

    &nbsp &nbsp A lot of these deals run five years. Your house will be foreclosed on in five years. You’ve gotten MAYBE $60,000 out of the bank, on a house you owned, free and clear. Now it’s gone, and you have to find somewhere to live, on social security alone. That’s only if you beat the odds and live. If you die, the house belongs to the bank. Any heirs are screwed. They might not even be able to get your stuff out if they don’t make the right legal moves.

    &nbsp &nbsp Anyone can scam you if you let them. Even, and especially, banks.

  2. Charles Duffy says:

    @AcidReign: Perhaps state law permitting those varies — but here, the only way I’ve heard of reverse mortgages operating, the bank cannot repossess and sell the home until the homeowner dies, moves, or sells.

    To be sure, you’re screwing your heirs — but that assumes that you have some, and that they were expecting to inherit the house (or proceeds from the same) in the first place. A reverse mortgage can be a reasonable thing.