equity stripping


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equity stripping

A term applied to a variety of sleight-of-hand practices,most often:

• Offering to assist homeowners facing foreclosure through buying their home and then selling it back to them, usually at rates and on terms guaranteed to result in default and loss of all equity

• Protecting assets from creditors by encumbering the equity with loans from friendly creditors, such as relatives, who won't foreclose if you miss a few payments

References in periodicals archive ?
This said, equity stripping is not recommended because it is illegal.
We are not aggressive and act like private equity stripping the business from their assets, we believe in management for the long term.
The bill prohibits brokers from financing certain insurance premiums, equity stripping and loan flipping, and encouraging default.
Even though California has extensive foreclosure equity stripping laws, the state has minimal laws against predatory lending.
1295 fails to prevent abusive prepayment penalties on subprime loans or equity stripping for high-cost loan borrowers, said Eakes, who helped draft North Carolina's predatory lending law and, not surprisingly, is a supporter of H.
Among the other specific practices that the guidelines describe as abusive are equity stripping, fee packing, loan flipping, refinancing of a special subsidized mortgage on terms adverse to the consumer, and encouraging borrowers to violate contracts, thereby defaulting on credit connected with the refinancing of that loan.
Appraisers are being indicted and convicted of participation in fraud transactions that range from bogus sales, to predatory lending, equity stripping, and mortgage fraud.
For example, they would attack equity stripping by strengthening the principle-in HOEPA and in the safety and soundness of bank supervision-that home-secured loans should not be made without an individual determination that the borrower can reasonably be expected to repay the loan without resort to the collateral.
That's one symptom of equity stripping by predatory lenders.
Equity stripping by predatory lenders operating in New York City and environs is still a problem (and new state and local laws to curb the practice may be annulled by Congress), according to California based foreclosure property investment advisory firm Foreclosures.