Legal Remedies
Several states have passed laws to prevent and/or regulate equity stripping schemes. Minnesota passed a comprehensive law aimed at "foreclosure re-conveyance" practices in 2004, and Maryland in 2005 was the first of at least 14 other states to adopt the Minnesota model for regulating these transactions. These state laws require adequate disclosures, capped fees, and an ability to pay on behalf of the consumer. The statutes also ban certain deceptive and unfair practices associated with equity stripping.
Other laws regulating the activity of "foreclosure consultants" have been passed in California, Georgia, and Missouri.
Additionally, state fraud and unfair and deceptive trade practices laws may be applicable. The Truth in Lending Act may also govern some transactions.
Read more about this topic: Equity Stripping
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