I received an email inquiry about whether “equity reduction plans” are an effective asset protection technique. The mail described these plans as a version of equity stripping In the equity reduction plan someone puts a friendly mortgage or lien on the debtor’s property but no money actually changes hand. I inferred that the tool is supposed to place a priority lien on the property to a friendly creditor without having to actually find or obtain enough cash to fund a lien large enough to cover most of the property equity.
I never heard of an equity reduction plan. I don’t think the plan as described will protect property because the mortgage/lien is essentially bogus. The conveyance of a lien or mortgage could be attacked as a fraudulent conveyance of an interest in property without actual consideration. . A relatively unknown Florida statute, Section 726.201 pertains to fraudulent loans that may apply to the equity reduction plan.
Last updated on May 22, 2020