Avoid Equity Scams

Equity scams are possible because, whenver significant amounts of money is involved, there is someone looking to take advantage of others.

Most home equity loan lenders are legitimate; however, some lenders may use tactics that homeowners should be wary of.

These unscrupulus lenders offer appealing loans, yet fail to tell the borrower about hidden charges or balloon charges. Hidden charges are often stripped from loans to make the APR (annual percentage rate) seem lower and more appealing. 

“Equity Stripping” is one of the leading scams on the loan marketplace.

The lenders engaging in “equity stripping” will often present to borrowers "too-good-to-be-true" deals, leading them to believe that they are saving money.

Once the borrower agrees to the contract, the lender may pose new charges, higher interest rates, and other fees without making these clear to the borrower. If these unexpected add-ons increase the amount of the payments to where the borrower gets into trouble and fails to make those payments, the lender can repossess the home.   

If a lender is pressuring you to sign an agreement, find another lender.  Pressuring borrowers is a surefire tip that the lender is out to take you for a ride.

The Federal Government has provided information to help borrowers be aware of, and avoid, this kind of situation.

To file a complaint or to get more information about abusive lending practices, visit http://www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.