Ethics · 18% of the SAFE exameasy
Correct answer: Homeowners with substantial home equity, often those in financial distress
Equity stripping targets homeowners who have built up significant equity in their homes, particularly those who are in financial distress or facing foreclosure. Predatory lenders encourage these homeowners to take out high-fee, high-interest loans secured by their home equity, resulting in the homeowner losing their equity while the lender profits from excessive fees and interest. First-time buyers, investors, and construction borrowers are not the typical targets of this scheme, as they either lack equity or are not in distress situations that make them vulnerable.
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