Scams Target Delinquent Homeowners

'Equity strippers' deceive borrowers behind on their mortgage payments
By Dustin Lushing,  Newser Staff
Posted Jul 3, 2007 5:45 PM CDT
Scams Target Delinquent Homeowners
US NEWS FORECLOSURE-SCAMS 1 MI   (KRT Photos)

(Newser) – A new form of fraud is thriving in the declining housing market, targeting desperate homeowners who are late on their mortgage payments. Known as equity strippers, companies cold-call burdened borrowers, promising a reprieve from their financial woes. In the end, they profit, and the owners end up losing their  home anyway, reports the New York Times.

The ploy takes various forms but invariably involves guaranteeing the anxious homeowner cash up front, no monthly rent, and the opportunity to regain their home in the long run. But once the owner hands over the deed, the "straw buyer" borrows as much as possible against the value of the house and keeps the cash, leaving the dupe with a looming foreclosure. (Read more fraud stories.)

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