What is Equity Skimming?
Equity skimming is a common type of real estate fraud. An accusation of equity fraud is serious, as both state and federal criminal charges can result. A homeowner who alleges damage due to equity fraud can also file a civil lawsuit with the goal of reclaiming the funds that were lost.
If you are accused of equity fraud, you need an attorney with an understanding of complex real estate transactions and with an extensive experience representing fraud clients.
Bukh Law Firm has represented many clients involved in foreclosure rescue scams and other types of real estate fraud. We can help you fight criminal and civil actions against you so you can try to stay out of prison and avoid the loss of assets.
Equity skimming involves improperly taking equity out of a home with the intent to defraud. There are a number of different kinds of equity skimming scams.
One of the most common types of equity skimming involves convincing desperate homeowners to convey title to their homes. Typically, equity skimming scams involve homeowners who are facing foreclosure and who are looking for ways to try to save their homes. An investor has the homeowner convey title so the home can be used as security for a new loan, and then promises to buy the house before foreclosure and to return it when everything has cleared.
After the title to the property is taken, the property is refinanced and all the equity is taken out. The investor then leaves the situation, leaving the homeowner with another mortgage on the property and no equity.
In some cases, the investor allows the original homeowner to stay in the house as a tenant, charging exorbitant rent. If the homeowner does not pay, the homeowner is evicted and the investor takes title to the house. The high rent that the homeowner pays can also cause them to go into more debt, further skimming equity off the house.
What is Equity Stripping?
Equity stripping is another term often used interchangeably with equity skimming. While convincing a homeowner to sign over title to a house is one of the most common types of equity stripping, there are also other approaches to improperly take equity out of a house.
One other option, for example, involves convincing a home seller to list a home for more than the house should be worth. Investors may do this by telling sellers they want to obtain a larger mortgage. The buyer qualifies for the large mortgage based on the inflated home price. The original homeowner may be paid the original asking price and then the buyer takes the remaining can balance and disappears, defaulting on the mortgage and causing the home to go into foreclosure..
Penalties for Equity Fraud
Equity fraud can result in a financial institution being defrauded of funds when the mortgage is taken to strip the equity from the home and not paid back. This can lead to bank fraud charges, which are federal charges that carry serious criminal penalties. 18 U.S. Code Section 1344 defines the offense of bank fraud to include participation in any scheme or artifice intended to defraud a financial institution or obtain items of value from a financial institution. The potential penalties for bank fraud include 30 years in prison and a fine up to $1,000,000.
When wire or postal communications are used as part of the equity fraud scam, it is possible for a defendant to be charged with fraud by wire (Code Section 1343) and mail fraud (Code Section 1341). When the wire or mail fraud affects a financial institution, a defendant can face 30 years in prison and a $1,000,000 fine for conviction.
Often, equity fraud schemes involve multiple parties working together. U.S. Code Section 1349 makes clear that anyone involved in a fraud conspiracy can face charges and penalties for the underlying offenses committed by any co-conspirator.
Getting Help from a New York City Equity Fraud Lawyer
Bukh Law Firm has experience with all types of foreclosure rescue and real estate scams, and we can help you to raise defenses or negotiate plea deals that limit penalties.
Call today at (212) 729-1632 to schedule a consultation and learn more.