Equity skimming/stripping clarification?

[Richard Rodriguez]

Hello all,

I have just become aware of this and have watched a few videos and read some documentation about it but I'm a bit confused. 

If a property is worth 300k and the owner has a 50k mortgage but is in default (so preforeclosure), can I buy the property from him for 100? I would NOT allow the owner to remain in the property nor rent/lease from me. I'd be buying it outright from him/her. I thought this has been going on forever but equity skimming has me wondering. Is this allowed? 

[Account Closed]

Quote from @Richard Rodriguez:

Hello all,

I have just become aware of this and have watched a few videos and read some documentation about it but I'm a bit confused. 

If a property is worth 300k and the owner has a 50k mortgage but is in default (so preforeclosure), can I buy the property from him for 100? I would NOT allow the owner to remain in the property nor rent/lease from me. I'd be buying it outright from him/her. I thought this has been going on forever but equity skimming has me wondering. Is this allowed? 

Equity skimming typically means taking over someone's property and loan, promising to make the payments, simply renting out the property but not paying the mortgage as agreed. 
 

Technically it isn't whether the property is in foreclosure or not in foreclosure, (if it's Washington, Oregon, California and a handful of other states it's treated even more seriously if the property is "distressed" or likely to become distressed in the future, that could be a criminal act) usually it's more the breach of trust and making a profit while doing so.

When someone is charged with equity skimming they usually add bank fraud, wire fraud, Consumer Protection ACT, Dodd-Frank Act, deception and artifices and a couple others I can't think of at the moment.