What Is The Definition Of Straw Buyer ?
A straw buyer is a person who willingly give out their profile information and personal details to people who want to obtain mortgage loans and have no intention of ever living in that property. A straw buyer will do this as a favor, for gifts or for commission. A straw buyer can also be a victim of identity theft. In this case, the straw buyer does not know that he is one. |
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In the former case, the straw buyer completely knows what he is doing, and is doing it willingly in the first place. They are taking money for selling their profile literally. There can be two legal implications for this. One is that being a straw buyer is illegal, and is a punishable crime. The other one is mortgage fraud because they are buying a house that they will not live in. This amounts to occupancy fraud. They are cheating the mortgage company in two ways. One is by lending the profile and the other is lying about their intent to live on the property they are purchasing. It is very difficult for the mortgage company to identify a straw buyer.
Sometimes, a straw buyer can be a victim of identity theft, and is unaware that his profile is being used to procure a mortgage. In this case, there will be investigations against the person who used the false profile.
Straw buyers are also involved in huge mortgage fraud rings. However, it has been seen that they leave the country after getting their cut. They end up getting sued by mortgage lenders and banks, but do not necessarily pay for their crime.
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