THE SUCKED-OUT SCAMS
THE SUCKED-OUT SCAMS
Get angry about equity robbery.
by Neil Jenman
There's a heartbreaking story on page 2 of The Australian today (August 28, 2006). A 75-year-old man and his wife have lost almost all the equity in their family home.
Twenty years ago, in 1986, this couple paid off their home. For the next 17 years they lived securely (as does anyone who owns their own home).
And then, one day, in 2003, they met one of those wealth or retirement advisers (or whatever fancy name spivs give themselves) who advised them to "release the equity in their home" and invest in something that would give them an income.
It's a financial pitch that thousands of Australian home owners hear every day. "Hey, you have got this valuable home with little or no debt so you should use the equity to increase your wealth."
Be careful - very careful.
Chances are that you are about to caught in a 'sucked-out-scam' - where the equity in your home is sucked out and handed to a group of spivs. Oh sure, it all looks so safe in the beginning and it all sounds so sensible; that's why it's catching so many people.
The elderly couple, who are the tragic examples in this warning, have gone from having a fully-owned home worth $1.2 million (i.e. $1.2 million in equity) to having a mortgage of $1.1 million and just $100,000 in equity. Plus, of course, repayments on their mammoth mortgage.
The company that urged them to "release their equity" is now in receivership - which means their equity has gone; sucked out by a group of spivs who (you can betcha life) will soon set up another scam under another company name.
One of the worst aspects of these scams - aside from how common they are - is how we, as a society, tolerate them. Rarely does anyone name the spivs (and their lawyers).
It's easy for people who haven't been caught to blame the victims and toss out words like foolish, greedy or naïve. Many of the victims (including the ones in this story) even describe themselves as "naïve". This is so wrong.
Labelling finance victims as foolish makes as much sense as labelling robbery victims as foolish.
These financial scams are robbery.
Until such time as we all - victims, observers, regulators (especially), politicians - start to see these scams for what they are - the deliberate theft of the assets of thousands of decent Australians - then every home owner is in danger of losing their equity.
The business people (make that 'con artists') responsible for the loss of this couple's equity should be treated like criminals.
As a society we should be doing everything we can to arrest white-collar crooks, convict them and, finally, imprison them.
But we don't. Because we're just not angry enough. Not yet.
Let's see how we feel after a few thousand more people have been caught and the financial losses reach the billions.
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This article was taken from the Consumer Alert page of the Jenman website.
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