Watch Out For "Equity Stripping" Scams

The New York Times has an article about a growing problem, a scam called “equity stripping.” Here’s how it works: You answer an advertisement targeting people who are facing foreclosure, but want to stay in their homes. You think you’re refinancing your loan at a lower rate, but in reality you’re transferring the deed to someone else. That person then takes out as much as they can against the value of your home. From the NYT:

Jessica Attie, co-director of the foreclosure prevention project at South Brooklyn Legal Services and the lawyer for the Johnsons, said her office was overwhelmed with homeowners who had handed over their deeds to people pretending to help “save” their homes.

We know times are tough and a lot of homeowners are facing difficult financial decisions, but make sure you know what you’re signing. If someone offers to “temporarily” buy your home, warning bells should go off.

New Scheme Preys on Desperate Homeowners [NYT]
(Photo:Oscar Hidalgo, NYT)