Posted in Finance, Accounting and Economics Terms, Total Reads: 343
Definition: Air Loan
An Air Loan is a fraud scheme in which a property and borrowers are invented by a mortgage broker. This is done to extract profits on completed loan transactions by lenders that default. These are mortgage fraud schemes to extract profits out of invented property and borrowers.
The broker creates hoax set of phone, mailboxes, employment ID, home address, credit history and other ID proofs to make his borrowers look real and so that they could get verified by anyone who wants to verify. For the property, the authentic papers, ownership history, appraisal value and other such set ups are done. This creates problems for the bank that provide loans for such properties.
Since the property does not really exist, the bank cannot recover the loan by selling the property in case of a default. Sometimes IDs of real people are stolen and are used for making such frauds.