Which of the following best describes a "Straw Buyer"?

• A. A buyer who is the victim of identity theft
• B. A buyer who intends to purchase a property but does not intend to occupy it
• C. A borrower who has not owned a primary residence in the past three years
• D. A buyer who accepts a fee for his/her social security number and other personal information on a mortgage application

Answer: (D)

A straw buyer is someone whose identity and credit are used to obtain a loan for another person, often in exchange for payment. The key clue here is accepting a fee to provide his or her Social Security number and other personal information on a mortgage application. That means the loan is being sought under someone else’s name, with the real borrower behind the scenes, typically to meet occupancy, income, or credit requirements or to conceal the true borrower. This deception is a form of mortgage fraud, because the lender is relying on false or misrepresented information. Regulators and licensing requirements prohibit and punish straw buyer arrangements, since they undermine the integrity of the lending process. The other scenarios describe different issues (identity theft victims, occupancy intentions, or ownership history) that don’t capture the essential deception involved in straw buying.