equity skimming

Definition

An illegal practice where someone collects rent on a property while intentionally not making mortgage payments, pocketing the difference until foreclosure. Real estate fraud with a countdown timer.

Example Usage

The scammer was convicted of equity skimming after buying distressed properties and collecting rent for 18 months without paying any mortgages.

Origin

Term emerged in 1980s-1990s as a recognized form of real estate fraud

Fun Fact

Equity skimming became so prevalent that Congress passed specific federal legislation making it a crime in 1989.

Source: Real estate fraud and legal terminology

Related Terms

Intermediate

seller financing

When the property seller acts as the bank because either the buyer can't get a traditional loan or the seller wants to collect interest payments. It's basically a handshake agreement with paperwork, beloved by people who can't qualify for mortgages and sellers who enjoy playing banker.

🏠 Real Estate

Intermediate

triple net lease

A commercial lease where the tenant pays all property expenses including taxes, insurance, and maintenance in addition to base rent. Abbreviated NNN, it's the landlord's dream where they collect rent while you pay for literally everything else.

🏠 Real Estate

Intermediate

scratch and dent

Industry slang for properties with minor cosmetic issues that scare away typical buyers but are catnip to investors and DIYers. Think ugly carpet and dated wallpaper, not structural disasters—though agents sometimes blur that line.

🏠 Real Estate

Advanced

seller carry-back

When the seller provides financing to the buyer instead of requiring a traditional mortgage, essentially becoming the bank. It's either a creative solution or a sign someone couldn't qualify for actual financing.

🏠 Real Estate

Advanced

wraparound mortgage

A secondary loan that 'wraps around' an existing mortgage, where the new lender pays the original loan. It's financial inception—a loan within a loan, typically used when someone can't refinance.

🏠 Real Estate

Intermediate

alligator property

An investment property with carrying costs that exceed the rental income, effectively eating the owner alive month by month. Named because it takes bigger and bigger bites out of your bank account.

🏠 Real Estate

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