Straw Buyers

Straw buyers are loan applicants who perpetrators use to obtain home loans, but who usually don't intend to occupy the properties they're buying.

A straw buyer is usually offered a payment, often sever thousand dollars, for the use of their name and credit information to make a "false purchase". A straw buyer may or may not know that their name will be on the mortgage application. Straw buyers are also used to sign documents that contain false information. For example a straw buyer might sign something that states that intend to live in the property when they really have no intention to do so. If a document is signed that states the property is worth a specific amount, but the straw buyer has never seen the property, they are committing fraud. If the lender asks if the down payment came from the straw buyer own funds and he/she answer dishonestly, this too would be fraud. After a straw buyer takes title to the property, the mastermind behind the scheme usually assumes the mortgage and the title to the property. However, a straw buyer may still be responsible for a mortgage even after someone else has assumed it because it was obtained fraudulently.

It is a criminal offence to obtain credit under false pretences. If payments are not made on the mortgage, the lender will foreclose on the property to recover their losses. The straw buyer could be sued for the difference between the amount of money received from the sale of the property and the amount of money owed on the mortgage.