Hello and good day to all reading this post, Can someone take the time to explain to me the concept of Equity Stripping and what constitutes this activity?
Source: Bankrate.com
“Equity stripping: A lender says you can get a home equity loan even though you know your monthly income isn’t enough to keep up with the payments. The lender encourages you to pad your income on the application so the loan will be approved. Such a lender has his eyes on your equity. If you default on the payments, the lender forecloses, takes your home and strips you of the equity.”
“Loan flipping: This is where a lender encourages you to refinance your loan repeatedly. In refinancing, the lender charges high fees. In most loan flipping cases, each successive loan is for a higher amount as fees are rolled into the loan amounts. With each flip of the loan, you increase your debt. If you get in over your head, you could lose your home.”
IMHO "loan flipping is a more common form of ‘equity stripping’. Both are forms of predatory lending.
:-\
Thank you for taking the time out of your day to respond to my inquiry 4EEM. Good luck with your investment endeavors.