Articles - Archived Expert Advice

Equity Skimming Scam

The interest rate on my adjustable-rate mortgage is too high and payments are starting to be more than I can afford. I heard about a company that will pay off the remainder of my mortgage and then resign the property back to me. Should I consider this as an option?

When something sounds too good to be true, it often is. Unfortunately, that is the scenario here. The company you are referring to is running a scam called "equity skimming," in which they target financially-distressed individuals and pressure them to sell their homes. In some cases, the homeowner is given a small down payment and then assured that the balance of their mortgage will be paid in full. Some buyers also promise to pay a sum of money after the property is sold with the intention of re-signing the property back when the person can afford the payments again.

Next, the owner is asked to quickly move out and deed the property over. In some cases, instead of paying off the loan as promised, the "skimmer" sells the property if it has a good bit equity. They then pay off debts related to the home and keep the equity for themselves. Either way, it results in the loss of the home.

Rather than go this route, look at other alternatives your lender may offer to improve your situation, like a loan modification or an extension. Another option is to refinance with LGFCU. Each member is afforded consideration in the same capacity and approval is contingent upon the evaluation of credit history, job stability and debt in relation to income. Don't be taken in by the "skim" scam. Our Education Services staff is happy to answer any questions at 877.367.5428.