Home Equity Fraud
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What Is Home Equity Fraud?
Home equity fraud can take many forms and may be accomplished in many ways. Most home equity fraud schemes involve a lender taking away a person’s property rights and stripping them of the remaining equity built up in the home. Basically, the lender or financial agency may request the homeowner to leverage amounts against their home. In the long run, the fraudster ends up taking the person’s equity that they have saved up.
This is common in instances where the person is behind on mortgage payments and is also known as “equity stripping." There are other types of home equity fraud, such as “equity flipping.” With equity flipping, the financial investor asks a person to refinance on their home, often at a cut or a portion of the refinance cost.
This can lead to situations where the investor obtains personal information of the homeowner and uses it in an illegal manner. Thus, many home equity fraud situations also involve some sort of violation and misuse of personal information.
Are There Any Legal Consequences of Home Equity Fraud?
Home equity fraud is illegal and may result in various consequences including:
- Criminal misdemeanor charges, which can lead to fines and jail time
- Loss of business or real estate license
- Felony charges, which often depends on the amount of assets stolen
In addition, home equity fraud can sometimes result in federal charges. This can occur in situations where there is company-wide corruption or where the fraud is built into the company’s operating policies. Many home equity lawsuits are also filed as class action suits if many consumers are affected all at a once.
How Can Equity Fraud Be Prevented?
One problem with home equity fraud is that it can occur even when working with popular name brand real estate companies. This is because often times an individual agent will perpetrate a fraud scheme on their own. Equity fraud can be prevented by being keen to certain “tip-offs” that suggest that fraud is in progress. For instance, you should be wary if an agent or lender:
- Asks you to falsify information about your home, mortgage status, or loan history
- Requires you to exaggerate income levels to qualify for higher loans
- Insists that you leverage against your home (i.e., insists that you take out equity with no other options)
These types of actions can be signals that may indicate that fraud is occurring in relation to your home equity.
Should I Hire a Lawyer if I Have Legal Issues Involving Home Equity Fraud?
Home equity fraud can involve some major legal issues and disputes. You may need to hire a real estate lawyer if you need help filing a lawsuit for home equity fraud issues. Your attorney can help determine whether you have a claim and what kind of options you have. In many cases, a monetary damages award can be claimed in order to make up for the losses caused by the fraud.
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Last Modified: 05-27-2014 02:06 PM PDT
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