Equity Skimming on Rentals
October 26, 2007 – 9:21 amKristal Kraft wrote a blog on Equity Skimming that sparked some ideas.
Equity skimming is when a landlord has no intention on paying the mortgage. Many times these landlords are overleveraged and may have multiple properties they own but can’t make payment. These criminals, decide to not pay the mortgage company but still collect rent from the tenants. This usually happens for about 6 months until there is an eviction notice on the door and the tenants usually have 3 days to find a new home. We have been seeing more of these due to the liberal mortgage practices that were giving loans to virtually anyone.
A business idea came to mind to try to protect these tenants who are renting a home. What if….
there was a data base of landlords that don’t meet certain criteria. (i.e credit score below x, own x homes, missed 3 payments, etc)
The system could use algorithms and statistical analysis to determine the probability of default. Surprisingly the mortgage companies have these sophisticated tools that are very accurate before they give out a loan but greed and low interest ARMs allowed them to look the other way.
Short term, we may see more equity skimming but as the mortgage companies tighten up and foreclosures drop, we will see less. With that said however, I still think there is a need to continue to find ways to protect the tenants that are living in these homes…..
7 Responses to “Equity Skimming on Rentals”
Thanks for the link love and spreading the word. I hate to see people being taken advantage of.
kk
By Kristal Kraft on Oct 26, 2007
Thank You!!!!!!!!!!!!!! We are going through this as we speak! We have a landlord that has done just as you described and are now facing having to move. She collected rent of 1200.00 for six months and then advised of foreclosure.
By Gloria and Darrell on Mar 5, 2008
landlord is a crook he collected 10 months rent. i found out about the foreclosure refused to pay rent now he is evicting us wants his rent!! can any body help? laywyers??
By Justin on Jun 11, 2008
Same thing is happening to me.. where do we (tenants) go for help. California state law allows for reparation of 3x the amount collected plus moving costs… but who do you report this fraudulent activity to?
The first time I had ever heard of rent skimming was yesterday!
By Tricia on Sep 25, 2008
My family and I are going through the same thing. We have been paying 1225.00 a month, almost forty thousand dollars since we have lived here(Michigan), and had a foreclosure notice hung on our door. Before this happened though I received notice that the house was in preforeclosure, when I asked him about this he denied everything. My family is now scrambling to find a place to live. I will be taking him to small claims court suing him for my security deposit, moving costs, and everything else I can come up with. Also if the mortgage company buys the house back at the
Sheriff sale, I will be bargaining with them for what they call a cash for keys program. You can receive up to 2500.00 for this. My city is leniant about evicting tenants when they have no idea that the house they are living in is being foreclosed on. Shame on any of you landlords that read this, I hope they pass strict laws soon and prosecute the living sh*t out of you. Hopefully the next house you own is your little room in the \"bighouse\". Any tenants out there keep digging around on the internet and get as much knowledge about laws and regulations in your state and go after the losers that do this to you and your family!!!!!
By Sara on Nov 4, 2008
Same here. There was something fishy about this rental from the beginning — remodeling/repairs wasn’t finished as promised on move-in, half of the house has been without heat for the 18 months of the rental because the repeated requests for repair were ignored, maintenance has been non-existent. Now we find this week that the property is in foreclosure and the landlord hasn’t made payments on the mortgage for five months. He had the gall to raise the rent recently, saying that his “costs” had increased — while making NO PAYMENTS TO THE BANK. This household contains children, grandma, and a handicapped adult. What the heck kind of ghouls will do this to families?!
By same here on Jan 26, 2009
Oh, and the monthly rent is $1775, the landlord owns two other properties and two brand-new cars.
By same here on Jan 26, 2009