Question:

What is a straw buyer scam?

Answer:

A straw buyer scam occurs when someone is giving their name to be used by someone else to purchase a house, or houses. The houses are cheap but the person buying them inflates the house cost and gets an unnecessary large loan in the straw buyer's name.

The original owner of the house is paid what the actual value of the home is, the scam artist gets lost with the profit he made for pulling a loan twice the house value, and the straw buyer is left with the collection agency running after him. Potential straw buyers are susceptible to people of their own community, people that have promised no harm when asking for permission to use their names or the straw buyers may have been promised some reward for the favor. It does ring a bell that something wrong is going on when someone asks you to use your name, even though many straw buyers claim they had been unaware of the mortgage fraud going on.

The straw buyer scams have become popular in areas with significant house depreciation and there are many straw buyer rings currently under federal investigation.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: