Equity Skimming
A real estate fraud in which a criminal takes over a property, collects rent, but fails to make mortgage payments — eventually leaving the original owner facing foreclosure.
Also known as: equity stripping, predatory property scheme, sale-leaseback fraud
Last reviewed: 1 June 2026
Equity skimming (also called equity stripping in some contexts) is a predatory property scheme targeting homeowners in financial distress. A fraudster approaches the owner, typically someone facing foreclosure or struggling with payments, and offers to 'save' the property by taking over payments or purchasing it at below market value. The owner is led to believe the situation will be resolved; in reality, the fraudster collects rental income from tenants or the previous owner while making no mortgage payments.
The mortgage continues to accrue arrears, foreclosure proceeds, and the fraudster disappears with the rental income collected in the interim. The former owner loses both the equity in their property and their home, often only discovering the full extent of the fraud during foreclosure proceedings.
Related variants include 'sale-leaseback' schemes where the homeowner sells the property at a loss to the fraudster and pays rent to remain, with a false promise of repurchase. Protections include consulting an independent solicitor or housing counsellor before signing any documents related to distressed property relief.
Examples
- A homeowner behind on mortgage payments is approached by someone promising to take over payments and save the property; they sign transfer documents, the fraudster collects three months of rent from a tenant, and then the property enters foreclosure because no mortgage payments were ever made.