Posted on: 07th Feb, 2007 01:57 pm
what a straw buyer means?
Straw buyer is a person whose credit is used for purchasing and securing finance for a property by someone else. It is one of the fraudulent methods used in mortgage transactions.
Hi McNickle,
Let me give you one example how such a scheme works.
Gary wants to buy some property but could not qualify as per the required terms and request George to step in as a straw buyer. George poses as Gary to complete the deal and afterwards gets a fee for his service.
Let me give you one example how such a scheme works.
Gary wants to buy some property but could not qualify as per the required terms and request George to step in as a straw buyer. George poses as Gary to complete the deal and afterwards gets a fee for his service.
Hi McNickle,
Welcome to the forum.
Straw buyers are people whose credit details are used by people to qualify for home purchase and mortgage loan. For instance, Rick wants to buy a home but he convinces Robert to step in and get along with the terms and conditions that Rick cannot obtain. Here Robert is a straw buyer who is paid several thousands of dollars for the use of his name and credit information.
Alternatively, suppose Jeff steals Mary's identity and forges all of her information on the purchase and loan agreements. Both Robert and Mary are not the actual persons buying the home. But their names are on the loan. Now, if they say that they are not aware of someone having used their information, then it will not be considered as legitimate excuse under the law.
Soon after the straw buyer takes over the property, the person behind all these assumes the loan and gets the title. But the straw buyer may still be responsible for the loan as he has committed fraud.
Hope you will be benefited from this information.
God bless you.
Samantha
Welcome to the forum.
Straw buyers are people whose credit details are used by people to qualify for home purchase and mortgage loan. For instance, Rick wants to buy a home but he convinces Robert to step in and get along with the terms and conditions that Rick cannot obtain. Here Robert is a straw buyer who is paid several thousands of dollars for the use of his name and credit information.
Alternatively, suppose Jeff steals Mary's identity and forges all of her information on the purchase and loan agreements. Both Robert and Mary are not the actual persons buying the home. But their names are on the loan. Now, if they say that they are not aware of someone having used their information, then it will not be considered as legitimate excuse under the law.
Soon after the straw buyer takes over the property, the person behind all these assumes the loan and gets the title. But the straw buyer may still be responsible for the loan as he has committed fraud.
Hope you will be benefited from this information.
God bless you.
Samantha
I have read one case of use of such straw buyers which resulted in major losses to lending institutions. Allow me to share it with you all.
After a 2 years of investigation by IRS, Kansas City FBI Office and HUD-OIG, a real estate investor named Brent Barber was arrested. He along with his 3 other business associates were purchasing run-down properties and getting mortgages in names of straw buyers after securing fraudulent appraisal of those properties. These straw buyers were given $2000 for taking part in the fraud. These straw buyers used to stop making payments towards the mortgage resulting in foreclosure of those properties, Barber & his associates had the mortgage proceeds to share. They did the same fraud for about 300 times before being caught. The foreclosure of those run-down properties resulted in losses in excess of around $15 million to various lending and financial institutions.
Scary isn't it :shock:
After a 2 years of investigation by IRS, Kansas City FBI Office and HUD-OIG, a real estate investor named Brent Barber was arrested. He along with his 3 other business associates were purchasing run-down properties and getting mortgages in names of straw buyers after securing fraudulent appraisal of those properties. These straw buyers were given $2000 for taking part in the fraud. These straw buyers used to stop making payments towards the mortgage resulting in foreclosure of those properties, Barber & his associates had the mortgage proceeds to share. They did the same fraud for about 300 times before being caught. The foreclosure of those run-down properties resulted in losses in excess of around $15 million to various lending and financial institutions.
Scary isn't it :shock:
Scary indeed!
It's hard to imagine how one can commit fraud and escape being caught for 300 times. But that's the way these straw buyers work. There are laws no doubt to curb predatory lending but then there should be strict laws to punish people commiting such frauds.
The frauds commited by straw buyers and other people need to be highlighted in front of the society. For that, the common people need to raise their voices against such frauds as they are the ultimate sufferers.
James
It's hard to imagine how one can commit fraud and escape being caught for 300 times. But that's the way these straw buyers work. There are laws no doubt to curb predatory lending but then there should be strict laws to punish people commiting such frauds.
The frauds commited by straw buyers and other people need to be highlighted in front of the society. For that, the common people need to raise their voices against such frauds as they are the ultimate sufferers.
James