What is equity stripping fraud?

Equity stripping is a predatory scheme designed to steal the equity homeowners have built up in their property. In a typical scheme, a distressed homeowner is offered a 'rescue' loan with extremely high interest rates and fees. Over time, the excessive costs consume all of the homeowner's equity, and the lender forecloses to capture the property. Another version involves convincing the homeowner to deed the property to a 'rescuer' with a lease-back arrangement, which ultimately results in the homeowner losing the property entirely. Equity stripping disproportionately targets elderly homeowners and those with significant equity but temporary financial hardship. Consult a HUD counselor or attorney before entering any deal involving your home's equity.