how to make money with real estate options_20

You also need to know that many equity-skimming scams involve the use of leaseoptions.

Equity skimming occurs when a property owner uses any part of the

rent, assets, proceeds, income, or other funds derived from the property covered

by a mortgage or deed of trust loan as personal funds. In a typical lease-option

equity-skimming scam, a property owner collects an option fee and security deposit

upfront and then collects lease payments for months on end without ever

making a single loan payment to the lender. This goes on until the lender finally

Chapter 12, United States Code, Section 1709-2, a person who engages in equity

skimming is defined as:

Whoever, with intent to defraud, willfully engages in a pattern or

practice of:

(1) purchasing one- to four-family dwellings (including condominiums

and cooperatives) which are subject to a loan in default at time of

purchase or in default within one year subsequent to the purchase and

the loan is secured by a mortgage or deed of trust insured or held by

the Secretary of Housing and Urban Development or guaranteed by

the Department of Veterans Affairs, or the loan is made by the Department

of Veterans Affairs,

(2) failing to make payments under the mortgage or deed of trust as the

payments become due, regardless of whether the purchaser is obligated

on the loan, and

(3) applying or authorizing the application of rents from such dwellings

for his own use, shall be fined not more than $250,000 or imprisoned

not more than 5 years, or both. This section shall apply to a purchaser

of such a dwelling, or a beneficial owner under any business organization

or trust purchasing such dwelling, or to an officer, director, or

agent of any such purchaser. Nothing in this section shall apply to the

purchaser of only one such dwelling.