Frank A. Rubino, ESQ.

FEDERAL AND INTERNATIONAL CRIMINAL DEFENSE

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What is a “straw buyer” in a mortgage fraud case?

Financial institutions which lend money to potential homeowners have a vested interest in seeing that those home loans can be repaid. Generally, prospective homeowners must first establish that they have a sufficient source of income, good credit history and other proof of their ability and willingness to repay those loans before gaining approval from banks. Sometimes unscrupulous home sellers will allow prospective homeowners to use a credit profile which belongs to another person to qualify that homebuyer for loans which they would not normally get.

In legal parlance that practice is commonly referred to as using a "straw buyer" to fraudulently obtain a loan. In many cases the person with the favorable credit profile is an active participant in the scheme. Those "straw buyers" typically receive a fee to allow their credit profile to be exploited. However, it is also important to know that some forms of using "straw buyers" are not as nefarious as others.

To illustrate this example let's imagine a father who wants to help his young daughter build some lifelong equity by purchasing a home of her own. Let's assume that the daughter is still in college and does not have a sufficient source of income, or credit history to qualify for her first starter home. A mortgage fraud involving a "straw buyer" occurs if the father then obtains a mortgage loan based on his credit profile and misleads the lender into believing that the home is for his own use. Although well-intentioned, the agreement between the father and daughter to engage in a conspiracy to deceive the lender may rise to the level of mortgage fraud.

If you are a Florida resident currently facing charges of mortgage fraud or other similar white-collar crimes you should know that you have certain constitutionally protected rights. For example, you have a right to challenge any evidence or testimony being used against you. You also have a right to have your attorney review the specific circumstances of your case to help determine the strengths and weaknesses of the prosecution's case against you.

Source: Fannie Mae, "Be your own best advocate-Mortgage Fraud Protection" Nov. 11, 2014

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Coral Gables Office

Frank A. Rubino, Esq.
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