Definition of an Air Loan

An air loan is the term used to describe a type of mortgage fraud that brokers commit against lenders. It is an elaborate hoax. For example, a mortgage broker trying to commit fraud would need to create a fake verifiable job, home address and credit history in order to complete an application.  The mortgage broker also use a fictitious property on the application. Ultimately, they gain profit by creating a false loan transaction and processing it with lenders.

Banks are severely injured with these types of transactions because they lose all monies. There is no real property or collateral to rely upon and resell in order to recoup the funds.

 

 

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